HomeMy WebLinkAboutMayer Financial, LP - 2001-02-05Council/Agency Meeting Held: 6 o D
Deferred/Continued to:
4Ap ov d ❑ onditionall pproved ❑ Denied Ci Cle s Sign . � re
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Council Meeting Date: May 16, 2011 Department ID Number: ED 11-20
CITY OF HUNTINGTON BEACH
REQUEST FOR COUNCIL/REDEVELOPMENT AGENCY ACTION
SUBMITTED TO: Honorable Mayor and City Council Members/Honorable Chairman and
Agency Members
SUBMITTED BY: Fred A. Wilson, City Manager/Executive Director
PREPARED BY: Stanley Smalewitz, Director of Economic Development/Deputy
Executive Director
SUBJECT: Adopt Resolution Nos. 389 and 2011-35 authorizing approval of the
Fifth Implementation Agreement to the Amended and Restated
Disposition and Development Agreement between the City of
Huntington Beach Redevelopment Agency and Mayer Financial, L.P.
Statement of Issue: Pursuant to the Amended and Restated Disposition and Development
Agreement (DDA), the Mayer Corporation has submitted an application to the City to
construct the third hotel at the Waterfront Site (Pacific Coast Highway/Beach Boulevard and
Huntington Street). The proposed Fifth Implementation Agreement provides for an extension
of time to build the third hotel and amends the comprehensive lease when the hotel site is
developed.
Financial Impact: The Mayer Corporation will provide for an annual $250,000 payment to
the City. However, the Mayer Corporation is entitled to receive reimbursement for approved
third -party expenditures directly related to the construction of the third hotel up to $200,000
per extension payment.
Recommended Action: Motion to:
1. Waive the thirty (30) day review requirement pursuant to Resolution No. 214 for review
of the Fifth Implementation Agreement, distributed April 21, 2011;
2. Approve Resolution No. 2011-35, "A Resolution of the City Council of the City of
Huntington Beach, California, Approving and Making Certain Findings Pursuant To
Health and Safety Code Section 33433 for a Proposed Fifth Implementation Agreement
to Amended and Restated Disposition and Development Agreement by and among the
Redevelopment Agency of the City of Huntington Beach, the City of Huntington Beach,
and Mayer Financial, L.P. including an attached Form Of Lease by and between the
Redevelopment Agency of the City of Huntington Beach and the Waterfront Hotel, LLC";
H -215- Item 11. - 1
REQUEST FOR COUNCIL ACTION
MEETING DATE: 5/16/2011 DEPARTMENT ID NUMBER: ED 11-20
3. Approve Resolution No. 389, "A Resolution of the Redevelopment Agency of. the City of.
Huntington Beach, California, Approving and Making Certain Findings Pursuant to
Health and Safety Code Section 33433 for a Proposed Fifth Implementation Agreement
to Amended and Restated Disposition and Development Agreement by and among the
Redevelopment Agency of the City of Huntington Beach, the City of Huntington Beach,
and Mayer Financial, L.P. including an attached Form of Lease by and between the
Redevelopment Agency of the City of Huntington Beach and the Waterfront Hotel, LLC";
and
4. Authorize the Mayor/Chairman and City Clerk/Agency Secretary to sign the Agreement
and all related documents.
Alternative Action(s):
Do not approve the Agreement and direct staff as necessary.
Analysis:
The Waterfront project is a master -planned development that began in 1989 with approval of
the Disposition and Development Agreement (DDA) with the Mayer Corporation. The DDA has
resulted in the development of the Hilton Waterfront Beach Resort, Hyatt Regency Huntington
Beach Resort, and the adjacent residential community. Since approval of the original DDA,
there have been two implementation agreements as it relates to the Hilton and Hyatt Hotels.
The third hotel is proposed to be located on property known as "Parcel C", which is located
immediately adjacent to the Hilton Parcel. Parcel C is the only portion of the Site that has not
been developed. On October 20, 2008, and October 18, 2010, Third and Fourth
Implementation Agreements were executed between the Agency and the Developer to extend
the Schedule of Performance for the development of Parcel C.
Pursuant to the DDA, the Mayer Corporation has submitted an application to the City to
construct the third hotel. The Environmental Review of the project is currently being completed
by the Planning and Building Department. The Fourth Implementation Agreement allows the
developer to purchase up to four (4), one-year extensions through 2013.
In October 2010, the Redevelopment Agency approved a Fourth Implementation Agreement
that provided a six-month extension to the Schedule of Performance from December 31, 2010,
to June 30, 2011.
The Fifth Implementation Agreement provides the Developer with the right to purchase
subsequent extensions based on the following parameters:
Provides for an additional six (6) one year extensions to December 31, 2015, for the
conveyance of Parcel C (the Third Hotel Site), with a payment requirement of $250,000
per extension.
Item 11. - 2 HB -216-
REQUEST FOR COUNCIL ACTION
MEETING DATE: 5/16/2011 DEPARTMENT ID NUMBER: ED 11-20
• Provides for an additional one (1) year extension to December 31, 2016, if the Developer
notifies Agency based on substantive information, from lenders or other third party
experts in the hotel financing industry, that financing is likely to become available within
the year.
• Allows for reimbursement/credit of up to $200,000 of the $250,000 payment for approved
expenditures directly related to the construction of the third hotel.
• If Parcel C is conveyed to the Developer during one of the extension periods, the
Developer is entitled to a partial repayment of that extension payment. The repayment
amount is equal to the pro rata monthly share of the annual payment after deduction of
the reimbursement the Developer received for eligible expenditures during that extension
period.
The third hotel will consist of the following: approximately 151 new guestrooms, with a
minimum of 125 suites, meeting space, a health spa, fitness facility and swimming pool,
restaurants and poolside food and beverage facilities, parking structure, and ancillary
retail facilities.
If and when the Developer fulfills the conditions precedent to the conveyance of the
leasehold interest in Parcel C, the Amended and Restated Ground Lease that is included
as Exhibit No. 1 to the Fifth Implementation Agreement will go into effect (Ground Lease).
For the purposes of the Ground Lease, the Hilton Parcel and Parcel C will be
consolidated into one site (Consolidated Site). The key components of the ground lease
can be summarized as follows:
• The ground lease term for the Consolidated Site will be set at 99 years.
• The ground lease payment schedule includes "Base Rent" and "Participation Rent". Both
the Base Rent and the Participation Rent are based on the terms applied to the Hyatt
ground lease.
o Current Hilton Lease only provides for a Base Rent.
o Participation Rent will be based on Room Revenue.
o Adjustment factors are included into the Ground Lease.
On April 21, 2011, in accordance to Resolution No. 214 adopted by the Agency in June 1991,
the Agency requested that all Owner Participation Agreements (OPA) and Disposition and
Development Agreements (DDA) be forwarded copies at least thirty (30) days prior to any
required action by the Agency; unless by a majority vote, such members waive this
requirement. The Fifth Implementation Agreement to the DDA has been provided to the City
Council 26 days for review, not the 30. Therefore, the Redevelopment Agency will be asked to
waive Resolution No. 214.
Environmental Status: The following Environmental Impact Reports and Addenda have
previously been prepared and certified: a FEIR for the Project Area; the FEIR 82-2 for the
Downtown Specific Plan, which was supplemented by a Supplemental Environmental Impact
Report (SEIR 82-2); and amended by an Addendum to SEIR 82-2 prepared in 1998; the FEIR
HB -217- Item 11. - 3
REQUEST FOR COUNCIL ACTION
MEETING DATE: 5/16/2011 DEPARTMENT ID NUMBER: ED 11-20
89-6 and the Addendum with a Statement of Overriding Considerations for the Main -Pier
Phase Two Project Area; the FEIR No. 94-1 for the City of Huntington Beach General Plan; the
FEIR No. 96-2 for the merger of Redevelopment Plans/Projects within the City of Huntington
Beach; Pacific City EIR No. 02-01; the Newland Street Residential Project EIR No. 2005-01,
and the Beach and Edinger Corridors Specific Plan EIR No. 08-008. Neither the Agreement
nor the lease change in any way the development or land use controls of the project, including
without limitation the height, density or intensity of the project. The proposed Agreement and
lease of the Property are included within the scope of the Environmental Documents in that all
of the potential environmental impacts of the proposed Agreement and lease of the Property
are addressed in the Environmental Documents.
The Planning and Building Department is currently processing an Existing Hilton Waterfront
Beach Resort Expansion — Addendum to SEIR 82-2, the Final Phase of the Waterfront
Development Project.
Strategic Plan Goal: Maintain financial viability and our reserves
Attachment(s):
NoOesceiption
1. A Resolution of the City Council of the City of Huntington Beach, California,
Approving and Making Certain Findings Pursuant To Health and Safety Code
Section 33433 for a Proposed Fifth Implementation Agreement to Amended and
Restated Disposition and Development Agreement by and among the
Redevelopment Agency of the City of Huntington Beach, the City of Huntington
Beach, and Mayer Financial, L.P. including an attached Form Of Lease by and
between the Redevelopment Agency of the City of Huntington Beach and the
Waterfront Hotel, LLC
2. A Resolution of the Redevelopment Agency of the City of Huntington Beach,
California, Approving and Making Certain Findings Pursuant to Health and Safety
Code Section 33433 for a Proposed Fifth Implementation Agreement to Amended
and Restated Disposition and Development Agreement by and among the
Redevelopment Agency of the City of Huntington Beach, the City of Huntington
Beach, and Mayer Financial, L.P. including an attached Form of Lease by and
between the Redevelopment Agency of the City of Huntington Beach and the
Waterfront Hotel, LLC
3. Fifth Implementation Agreement to Amended and Restated Disposition and
Development Agreement
4. Summary Report Pursuant to Section 33433 of the California Health and Safety
Code
Item 11. - 4 HB -218-
i
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II
CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH
RESOLUTION NO. 2011-35
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON
BEACH, CALIFORNIA, APPROVING AND MAKING CERTAIN FINDINGS
PURSUANT TO HEALTH AND SAFETY CODE SECTION 33433 FOR A
PROPOSED FIFTH IMPLEMENTATION AGREEMENT TO AMENDED AND
RESTATED DISPOSITION AND DEVELOPMENT AGREEMENT BY AND
AMONG THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON
BEACH, THE CITY OF HUNTINGTON BEACH, AND MAYER FINANCIAL,
L.P. INCLUDING AN ATTACHED FORM OF LEASE BY AND BETWEEN THE
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH AND
THE WATERFRONT HOTEL, LLC
WHEREAS, the Redevelopment Agency of the City of Huntington Beach ("Agency") is
engaged in activities necessary to execute and implement the redevelopment plan ("Redevelopment
Plan") for the Merged Redevelopment Project Area of Huntington Beach ("Merged Project Area");
and
WHEREAS, Agency and Mayer Financial, L.P., a California limited partnership
("Developer") , are parties to that certain Amended and Restated Disposition and Development
Agreement dated as of September 14, 1998 (the "Original Agreement"), as amended by that certain
First Implementation Agreement to Amended and Restated Disposition and Development Agreement
dated as of May 15, 2000 (the "First Implementation Agreement"), that certain Second
Implementation Agreement to Amended and Restated Disposition and Development Agreement dated
as of February 5, 2001 (the "Second Implementation Agreement"), that certain Third Implementation
Agreement to Amended and Restated Disposition and Development Agreement dated as of October
20, 2008 (the "Third Implementation Agreement"), and that certain Fourth Implementation
Agreement to Amended and Restated Disposition and Development Agreement dated as of October
18, 2010 (the "Fourth Implementation Agreement") (the Original Agreement, the First
Implementation Agreement, the Second Implementation Agreement, the Third Implementation
Agreement, and the Fourth Implementation Agreement may hereinafter be referred to together as the
"Existing Agreement"). The Existing Agreement provides for the phased disposition of the "Site"
described therein and the development and operation by Developer on the Site of certain hotel,
residential, and related improvements; and
WHEREAS, Agency, the City of Huntington Beach, and Developer now propose to enter into
a Fifth Implementation Agreement to the Existing Agreement ("Agreement") including an attached
63562
Pagel of 4
Resolution No. 2011-35
form of lease by and between the Agency and the Waterfront Hotel, LLC. The real property to be
leased pursuant to the form of lease attached to the Agreement ("Property") is within the Merged
Project Area; and
WHEREAS, pursuant to the California Community Redevelopment Law (California Health
and Safety Code Section 33000 et seq.) ("CRL"), the Agency and the City Council held a joint public
hearing on the Agreement (including the form of lease attached thereto), having duly published notice
of such public hearing and having made copies of the Agreement and the summary referred to in CRL
Section 33433 ("33433 Report") available for public inspection and copying, and
WHEREAS, the following Environmental Impact Reports and Addenda have previously been
prepared and certified (as applicable) (collectively, the "Environmental Documents"): a Final
Environmental Impact Report for the Project Area; the Final Environmental Impact Report 82-2 for
the Downtown Specific Plan, which was supplemented by a Supplemental Environmental Impact
Report (SEIR 82-2) and addended by an Addendum to SEIR 82-2 prepared in 1998; the Final
Environmental Impact Report 89-6 and the Addendum with a Statement of Overriding Considerations
for the Main -Pier Phase Two Project Area; the Final Environmental Impact Report No. 94-1 for the
City of Huntington Beach General Plan; the Final Environmental Impact Report No_ 96-2 for the
merger of Redevelopment Plans/Pro'ects within the City of Huntington Beach; Pacific City EIR No.
02-01; the Newland Street Residential Project EIR No. 2005-01, and the Beach and Edinger
Corridors Specific Plan EIR No. 08-008. Neither the Agreement nor the lease change in any way the
development or land use controls of the project, including without limitation the height, density or
intensity of the project. The proposed Agreement and lease of the Property are included within the
scope of the Environmental Documents in that all of the potential environmental impacts of the
proposed Agreement and lease of the Property are addressed in the Environmental Documents and,
therefore, no further environmental review or documents are required in connection with the
proposed Agreement and lease of the Property; and
WHEREAS, the City Council has duly considered all terms and conditions of the proposed
transaction, and believes that it is in the best interests of the Merged Project Area, the Agency and the
City and the health, safety, morals and welfare of its residents, and in accord with the public purposes
and provisions of applicable State and local law and requirements; and
WHEREAS, all other legal prerequisites to the adoption of this Resolution have occurred.
NOW, THEREFORE, IT IS RESOLVED by the City Council of the City of Huntington
Beach, California, as follows:
63562
The City Council hereby finds and determines that all recitals set forth in this Resolution are
true and correct.
Page 2 of 4
Resolution No. 2011-35
2. The City Council has received and heard all oral and written objections to the proposed
Agreement (including the form of lease attached thereto) and to this transaction, and all such
oral and written objections are hereby overruled.
3. The City Council hereby finds and determines that the consideration to be received for the
lease of the Property is not less than the fair market value at its highest and best use in
accordance with the Redevelopment Plan, based on, among other reasons, the information
contained in the 33433 Report.
4. The City Council hereby finds and determines that the lease of the Property will assist in the
elimination of blight, based on, among other reasons, the information contained in the 33433
Report.
5. The City Council hereby finds and determines that the lease of the Property is consistent with
the implementation plan adopted pursuant to CRL Section 33490, based on, among other
reasons, the information contained in the 33433 Report.
b. The proposed Agreement (including the form of lease attached thereto) is hereby approved in
substantially the form presented at this meeting, with such minor non -substantive changes as
may be approved by the City Manager with the approval as to form by the City Attorney.
7. The Mayor and the City Manager are each hereby authorized to execute the Agreement
(including the form of lease attached thereto) on behalf of the City. A copy of the Agreement
when executed by the City shall be placed on file in the office of the City Clerk as Document
No. Resolution No. 2011-35.
63562
Page 3 of 4
Resolution No. 2011-35
8. The City Manager (or his or her designee) is hereby authorized, on behalf of the City, to sign
all documents necessary and appropriate to carry out and implement the Agreement ('including
executing the form of lease attached thereto), and to administer the City's obligations,
responsibilities and duties to be performed thereunder.
Approved and adopted this 16 tday of May , 2011.
ATTEST:
y Clerk
63562
1y1�
3ciy Attorn y
Page 4 of 4
Res. No. 2011-35
STATE OF CALIFORNIA
COUNTY OF ORANGE ) ss:
CITY OF HUNTINGTON BEACH )
I, JOAN L. FLYNN the duly elected, qualified City Clerk of the City of
Huntington Beach, and ex-officio Clerk of the City Council of said City, do hereby
certify that the whole number of members of the City Council of the City of
Huntington Beach is seven, that the foregoing resolution was passed and adopted
by the affirmative vote of at least a majority of all the members of said City Council
at a regular meeting thereof held on May 16, 2011 by the following vote:
AYES: Shaw, Harper, Hansen, Carchio, Bohr, Dwyer
NOES: Boardman
ABSENT: None
ABSTAIN: None
Cit Jerk and ex'
-officio rk of the
City Council of the City of
Huntington Beach, California
ATTACHMENT #2
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH
RESOLUTION NO. 389
A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF
HUNTINGTON BEACH, CALIFORNIA, APPROVING AND MAKING CERTAIN
FINDINGS PURSUANT TO HEALTH AND SAFETY CODE SECTION 33433
FOR A PROPOSED FIFTH IWLEMENTATION AGREEMENT TO AMENDED
AND RESTATED DISPOSITION AND DEVELOPMENT AGREEMENT BY
AND AMONG THE REDEVELOPMENT AGENCY OF THE CITY OF
HUNTINGTON BEACH, THE CITY OF HUNTINGTON BEACH, AND MAYER
FINANCIAL, L.P. INCLUDING AN ATTACHED FORM OF LEASE BY AND
BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF
HUNTINGTON BEACH AND THE WATERFRONT HOTEL, LLC
WHEREAS, the Redevelopment Agency of the City of Huntington Beach ("Agency") is
engaged in activities necessary to execute and implement the redevelopment plan ("Redevelopment
Plan") for the Merged Redevelopment Project Area of Huntington Beach ("Merged Project Area");
and
WHEREAS, Agency and Mayer Financial, L.P., a California limited partnership
("Developer") , are parties to that certain Amended and Restated Disposition and Development
Agreement dated as of September 14, 1998 (the "Original Agreement"), as amended by that certain
First Implementation Agreement to Amended and Restated Disposition and Development Agreement
dated as of May 15, 2000 (the "First Implementation Agreement"), that certain Second
Implementation Agreement to Amended and Restated Disposition and Development Agreement dated
as of February 5, 2001 (the "Second Implementation Agreement"), that certain Third Implementation
Agreement to Amended and Restated Disposition and Development, Agreement dated as of October
20, 2008 (the "Third Implementation Agreement"), and that certain Fourth Implementation
Agreement to Amended and Restated Disposition and Development Agreement dated as of October
18, 2010 (the "Fourth Implementation Agreement") (the Original Agreement, the First
Implementation Agreement, the Second Implementation Agreement, the Third Implementation
Agreement, and the Fourth Implementation Agreement may hereinafter be referred to together as the
"Existing Agreement")- The Existing Agreement provides for the phased disposition of the "Site"
described therein and the development and operation by Developer on the Site of certain hotel,
residential, and related improvements; and
WHEREAS, Agency, the City of Huntington Beach, and Developer now propose to enter into
a Fifth Implementation Agreement to the Existing Agreement ("Agreement") including an attached
63563
Page 1 of 4
RDA Resolution No. 389
form of lease by and between the Agency and the Waterfront Hotel, LLC. The real property to be
leased pursuant to the form of lease attached to the Agreement ("Property") is within the Merged
Project Area; and
WHEREAS, pursuant to the California Community Redevelopment Law (California Health
and Safety Code Section 33000 et seq.) ("CRL" ), the Agency and the City Council held a joint public
hearing on the Agreement (including the form of lease attached thereto), having duly published notice
of such public hearing and having made copies of the Agreement and the summary referred to in CRL
Section 33433 ("33433 Report") available for public inspection and copying; and
WHEREAS, the following Environmental Impact Reports and Addenda have previously been
prepared and certified (as applicable) (collectively, the "Environmental Documents"): a Final
Environmental Impact Report for the Project Area; the Final Environmental Impact Report 82-2 for
the Downtown Specific Plan, which was supplemented by a Supplemental Environmental Impact
Report (SEIR 82-2) and addended by an Addendum to SEIR 82-2 prepared in 1998; the Final
Environmental Impact Report 89-6 and the Addendum with a Statement of Overriding Considerations
for the Main -Pier Phase Two Project Area; the Final Environmental Impact Report No. 94-1 for the
City of Huntington Beach General Plan; the Final Environmental Impact Report No. 96-2 for the
merger of Redevelopment Plans/Projects within the City of Huntington Beach; Pacific City EIR No.
02-01; the Newland Street Residential Project EIR No. 2005-01, and the Beach and Edinger
Corridors Specific Plan EIR No_ 08-008. Neither the Agreement nor the lease change in any way the
development or land use controls of the project, including without limitation the height, density or
intensity of the project. The proposed Agreement and lease of the Property are included within the
scope of the Environmental Documents in that all of the potential environmental impacts of the
proposed Agreement and lease of the Property are addressed in the Environmental Documents and,
therefore, no further environmental review or documents are required in connection with the
proposed Agreement and lease of the Property; and
WHEREAS, the Agency has duly considered all terms and conditions of the proposed
transaction, and believes that it is in the best interests of the Merged Project Area, the Agency and the
City and the health, safety, morals and welfare of its residents, and in accord with the public purposes
and provisions of applicable State and local law and requirements; and
WHEREAS, all other legal prerequisites to the adoption of this Resolution have occurred.
NOW, THEREFORE, IT IS RESOLVED by the Redevelopment Agency of the City of
Huntington Beach, California, as follows. -
The Agency hereby finds and determines that all recitals set forth in this Resolution are true
and correct.
63563
Page 2 of 4
2. The Agency has received and heard all oral and written objections to the proposed Agreement
(including the form of lease attached thereto) and to this transaction, and all such oral and
written objections are hereby overruled.
3. The Agency hereby finds and determines that the consideration to be received for the lease of
the Property is not less than the fair market value at its highest and best use in accordance
with the Redevelopment Plan, based on, among other reasons, the information contained in
the 33433 Report_
4. The Agency hereby finds and determines that the lease of the Property will assist in the
elimination of blight, based on, among other reasons, the information contained- in the 33433
Report.
5. The Agency hereby finds and determines that the lease of the Property is consistent with the
implementation plan adopted pursuant to CRL Section 33490, based on, among other
reasons, the information contained in the 33433 Report.
6. The proposed Agreement (including the form of lease attached thereto) is hereby approved in
substantially the form presented at this meeting, with such minor non -substantive changes as
may be approved by the Executive Director of the Agency with the approval as to form by the
Agency General Counsel.
7. The Chairman of the Agency and the Executive Director of the Agency are each hereby
authorized to execute the Agreement (including the form of lease attached thereto) on behalf
of the Agency. A copy of the Agreement when executed by the Agency shall be placed on file
in the office of the Agency Clerk as Document No. RDA Resolution No. 389.
63563
Page 3 of 4
RDA Resolution No. 389
8. The Executive Director of the Agency (or his or her designee) is hereby authorized, on behalf
of the Agency, to sign all documents necessary and appropriate to carry out and implement
the Agreement (including executing the form of lease attached thereto), and to administer the
Agency's obligations, responsibilities and duties to be performed thereunder.
Approved and adopted this 16tday of May , 2011.
Chai an
ATTEST: APPROVED AS TO FORM:
� 1 `
gency Clerk gency General Counsel
63563
Page 4 of 4
Res. No. 389
STATE OF CALIFORNIA. )
COUNTY OF ORANGE ) ss
CITY OF HUNTINGTON BEACH )
I, JOAN FLYNN, Clerk of the Redevelopment Agency of the
City of Huntington Beach, California, DO HEREBY CERTIFY that the
foregoing resolution was duly adopted by the Redevelopment Agency of
the City of Huntington Beach at a regular meeting of said Redevelopment
Agency held on May 16, 2011 and that it was so adopted by the following
vote:
AYES: Shaw, Harper, Hansen, Carchio, Bohr, Dwyer
NOES: Boardman
ABSENT: None
ABSTAIN: None
CIdV of the Redevelopme Agency
of the City of Huntington Beach, CA
ATTACHMENT #3
FIFTH IMPLEMENTATION AGREEMENT
TO AMENDED AND RESTATED
DISPOSITION AND DEVELOPMENT AGREEMENT
This FIFTH IMPLEMENTATION AGREEMENT TO AMENDED AND RESTATED
DISPOSITION AND DEVELOPMENT AGREEMENT (this "Fifth Implementation
Agreement") is dated for reference purposes as of the f6�day of V , 2011, and
is entered into by and among the REDEVELOPMENT AGENCY OF THE CITY OF
HUNTINGTON BEACH, a public body, corporate and politic ("Agency"), the CITY OF
HUNTINGTON BEACH, a municipal corporation ("City"), and MAYER FINANCIAL, L.P.,
a California limited partnership ("Developer") (collectively, the "Parties").
RECITALS
A. Agency and Developer have entered into that certain Amended and Restated
Disposition and Development Agreement dated as of September 14, 1998 (the "Original
Agreement"), as amended by that certain First Implementation Agreement to Amended and
Restated Disposition and Development Agreement dated as of May 15, 2000 (the "First
Implementation Agreement"), that certain Second Implementation Agreement to Amended and
Restated Disposition and Development Agreement dated as of February 5, 2001 (the "Second
Implementation Agreement"), that certain Third Implementation Agreement to Amended and
Restated Disposition and Development Agreement dated as of October 20, 2008 (the "Third
Implementation Agreement"), and that certain Fourth Implementation Agreement to Amended
and Restated Disposition and Development Agreement dated as of October 18, 2010 (the "Fourth
Implementation Agreement") (the Original Agreement, the First Implementation Agreement, the
Second Implementation Agreement, the Third Implementation Agreement, and the Fourth
Implementation Agreement may hereinafter be referred to together as the "Existing
Agreement"). The Existing Agreement provides for the phased disposition of the "Site"
described therein and the development and operation by Developer on the Site of certain hotel,
residential, and related improvements. All defined terms set forth in this Fifth Implementation
Agreement shall have the same meanings as are ascribed to said terms in the Existing Agreement
except as may be expressly set forth herein.
B. Developer previously received the "First Extension" as referred to in Section
203.3(a)(12)(a) of the Existing Agreement.
C. On or about December 18, 2009, Developer submitted to Agency a Proposal for
Agency's review and approval for the development and use of Parcel C, in full compliance with
Section 203.3(a)(12)(b)(1) of the Existing Agreement and Item 25 of the Schedule of
Performance (Attachment No. 3).
D. Pursuant to the Fourth Implementation Agreement, the December 31, 2010,
deadline for satisfaction of the conditions precedent for conveyance of the long-term leasehold
interest in Parcel C and the December 31, 2010, closing date were extended six months to June
30, 2011.
112/017963-0011
1097566.07 a04/19/11 —1—
E. On or about March 10, 2011, Agency transferred to City and City, accepted from
Agency Agency's leased fee interest in and to Parcel C and the Waterfront Hilton Parcel
described in that certain ground lease for said parcel dated as of April 28, 1989, between Agency
and The Waterfront Hotel, LLC, a California limited liability company (as successor to
Waterfront Construction No. 1, a California limited partnership).
F. The Parties desire to further amend the Existing Agreement as set forth herein.
COVENANTS
Based on the foregoing Recitals, which are incorporated into this Fifth Implementation
Agreement by this reference, and for good and valuable consideration, the receipt of which is
hereby acknowledged by the Parties, Agency and Developer agree that the Existing Agreement
shall be amended as follows:
1. Section 203.3(a)(12) of the Existing Agreement is hereby deleted and replaced in
its entirety to read as follows:
"12. Developer shall have satisfied all conditions precedent for conveyance of
the leasehold interest in Parcel C no later than June 30, 2011; provided, however, that if
Developer is not in material default of any of Developer's obligations to Agency or the City of
Huntington Beach pertaining to Parcel C as set forth in any of the Parcel C Agreements as
defined in subsection (h) below, as the same may be amended or modified from time to time
(each a "Parcel C Default"), at the time Developer elects to extend such deadlines, Developer
shall have the right to purchase one six month extension and up to five additional annual
extensions of such deadlines in accordance with the following:
(a)(1) The extension provided in accordance with this subsection (a) is
sometimes hereinafter referred to as the "Second Extension." By its approval and execution of
this Fifth Implementation Agreement, Developer hereby notifies Agency that Developer desires
to extend by six months the June 30, 2011, deadline for satisfaction of the conditions precedent
for conveyance of the long-term leasehold interest in Parcel C and the June 30, 2011, closing
date (see Item 36 of the Schedule of Performance [Attachment No. 31). Without limiting any
rights or remedies of the City or Agency or any notice and cure periods under any Parcel C
Agreement, and only for purposes of the extension provisions of this Section 12: (A) the Agency
Executive Director shall have until May 31, 2011, to provide notice to Developer if there is a
Parcel C Default ("Parcel C Default Notice"); and (B) in the event a Parcel C Default Notice is
timely provided to Developer, Developer shall have until June 30, 2011, to cure any such Parcel
C Default. If and only if by June 30, 2011, Developer has both cured any such Parcel C Default
and paid to City the sum of Two Hundred Fifty Thousand Dollars ($250,000) ("Second
Extension Payment") (and subject to any credit against the Second Extension Payment to which
Developer is entitled in accordance with Section 203.3(a)(12)(g) hereinbelow), then the deadline
in Item 36 of the Schedule of Performance shall be extended to December 31, 2011.
(2) In the event Developer receives the Second Extension pursuant to
subparagraph (1) above and thereafter conveyance to Developer of the long-term leasehold
interest in Parcel C occurs prior to December 31, 2011, then, within thirty (30) days after the
112/017963-0011
1097566.07 a04/19/11 -2-
closing date for the long-term Parcel C lease, Agency shall, or shall cause the City to, promptly
refund to Developer the pro rata monthly portion of the Second Extension Payment (after taking
into account any credits to which Developer is entitled under Section 203.3(a)(12)(g)) for the
number of months remaining between the date of conveyance to Developer of the long-term
leasehold interest in Parcel C and December 31, 2011. For illustrative purposes only, if
Developer receives the Second Extension, Developer is entitled to a $130,000 credit against the
Second Extension Payment pursuant to Section 203.3(a)(12)(g), and conveyance to Developer of
the long-term leasehold interest in Parcel C occurs on October 31, 2011, then the amount of the
refund to which Developer is entitled (in addition to the credit) shall be Twenty Thousand
Dollars ($20,000) ($250,000 Second Extension Payment less $130,000 credit = $120,000
payment, or $10,000 pro rata monthly payment amount, multiplied by 2 months for the time
period between October 31, 2011, and December 31, 2011, _ $20,000).
(b)(1) An extension provided in accordance with this subsection (b) is
sometimes hereinafter referred to as the "Third Extension." In the event Developer receives the
Second Extension and thereafter Developer desires to extend by one additional year the
December 31, 2011, deadline for satisfaction of the conditions precedent for conveyance of the
long-term leasehold interest in Parcel C and the December 31, 2011, closing date (see Item 36 of
the Schedule of Performance as previously extended in accordance with subsection (a), above),
Developer shall provide written notice to the Agency Executive Director of Developer's election
to so extend such deadlines no later than October 31, 2011. Without limiting any rights or
remedies of the City or Agency or any notice and cure periods under any Parcel C Agreement,
and only for purposes of the extension provisions of this Section 12: (A) the Agency Executive
Director shall have until November 30, 2011, to provide to Developer a Parcel C Default Notice;
and (B) in the event a Parcel C Default Notice is timely provided to Developer, Developer shall
have until December 31, 2011, to cure any such Parcel C Default. If and only if by December
31, 2011, Developer has both cured any such Parcel C Default and paid to City the sum of Two
Hundred Fifty Thousand Dollars ($250,000) ("Third Extension Payment") (and subject to any
credit against the Third Extension Payment to which Developer is entitled in accordance with
Section 203.3(a)(12)(g) hereinbelow), then the deadline in Item 36 of the Schedule of
Performance shall be extended to December 31, 2012.
(2) In the event Developer receives the Third Extension pursuant to
subparagraph (1) above and thereafter conveyance to Developer of the long-term leasehold
interest in Parcel C occurs prior to December 31, 2012, then, within thirty (30) days after the
closing date for the long-term Parcel C lease, Agency shall, or shall cause the City to, promptly
refund to Developer the pro rata monthly portion of the Third Extension Payment (after taking
into account any credits to which Developer is entitled under Section 203.3(a)(12)(g)) for the
number of months remaining between the date of conveyance to Developer of the long-term
leasehold interest in Parcel C and December 31, 2012. For illustrative purposes only, if
Developer receives the Third Extension, Developer is entitled to a $130,000 credit against the
Third Extension Payment pursuant to Section 203.3(a)(12)(g), and conveyance to Developer of
the long-term leasehold interest in Parcel C occurs on July 1, 2012, then the amount of the refund
to which Developer is entitled (in addition to the credit) shall be Sixty Thousand Dollars
($60,000) ($250,000 Third Extension Payment less $130,000 credit = $120,000 payment, or
$10,000 pro rata monthly payment amount, multiplied by 6 months for the time period between
July 1, 2012, and December 31, 2012, _ $60,000).
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(c)(1) An extension provided in accordance with this subsection (c) is
sometimes hereinafter referred to as the "Fourth Extension." In the event Developer receives the
Second Extension and the Third Extension and thereafter Developer desires to extend by one
additional year the December 31, 2012, deadline for satisfaction of the conditions precedent for
conveyance of the long-term leasehold interest in Parcel C and the December 31, 2012, closing
date (see Item 36 of the Schedule of Performance as previously extended in accordance with
subsections (a) and (b), above), Developer shall provide written notice to the Agency Executive
Director of Developer's election to so extend such deadlines no later than October 31, 2012.
Without limiting any rights or remedies of the City or Agency or any notice and cure periods
under any Parcel C Agreement, and only for purposes of the extension provisions of this Section
12: (A) the Agency Executive Director shall have until November 30, 2012, to provide to
Developer a Parcel C Default Notice; and (B) in the event a Parcel C Default Notice is timely
provided to Developer, Developer shall have until December 31, 2012, to cure any such Parcel C
Default. If and only if by December 31, 2012 Developer has both cured any such Parcel C
Default and paid to City the sum of Two Hundred Fifty Thousand Dollars ($250,000) ("Fourth
Extension Payment") (subject to any credit against the Fourth Extension Payment to which
Developer is entitled in accordance with Section 203.3(a)(12)(g) hereinbelow), then the deadline
in Item 36 of the Schedule of Performance shall be extended to December 31, 2013.
(2) In the event Developer receives the Fourth Extension pursuant to
subparagraph (1) above and thereafter conveyance to Developer of the long-term leasehold
interest in Parcel C occurs prior to December 31, 2013, then, within thirty (30) days after the
closing date for the long-term Parcel C lease, Agency shall, or shall cause the City to, promptly
refund to Developer the pro rata monthly portion of the Fourth Extension Payment (after taking
into account any credits to which Developer is entitled under Section 203.3(a)(12)(g)) for the
number of months remaining between the date of conveyance to Developer of the long-term
leasehold interest in Parcel C and December 31, 2013. For illustrative purposes only, if
Developer receives the Fourth Extension, Developer is entitled to a $130,000 credit against the
Fourth Extension Payment pursuant to Section 203.3(a)(12)(g), and conveyance to Developer of
the long-term leasehold interest in Parcel C occurs on July 1, 2013, then the amount of the refund
to which Developer is entitled (in addition to the credit) shall be Sixty Thousand Dollars
($60,000) ($250,000 Fourth Extension Payment less $130,000 credit = $120,000 payment, or
$10,000 pro rata monthly payment amount, multiplied by 6 months for the time period between
July 1, 2013, and December 31, 2013, _ $60,000).
(d)(1) An extension provided in accordance with this subsection (d) is
sometimes hereinafter referred to as the "Fifth Extension." In the event Developer receives the
Second Extension, the Third Extension, and the Fourth Extension and thereafter Developer
desires to extend by one additional year the December 31, 2013, deadline for satisfaction of the
conditions precedent for conveyance of the long-term leasehold interest in Parcel C and the
December 31, 2013, closing date (see Item 36 of the Schedule of Performance as previously
extended in accordance with subsections (a), (b), and (c) above), Developer shall provide written
notice to the Agency Executive Director of Developer's election to so extend such deadlines no
later than October 31, 2013. Without limiting any rights or remedies of the City or Agency or
any notice and cure periods under any Parcel C Agreement, and only for purposes of the
extension provisions of this Section 12: (A) the Agency Executive Director shall have until
November 30, 2013, to provide to Developer a Parcel C Default Notice; and (B) in the event a
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Parcel C Default Notice is timely provided to Developer, Developer shall have until December
31, 2013, to cure any such Parcel C Default. If and only if by December 31, 2013, Developer
has both cured any such Parcel C Default and paid to City the sum of Two Hundred Fifty
Thousand Dollars ($250,000) ("Fifth Extension Payment") (subject to any credit against the Fifth
Extension Payment to which Developer is entitled in accordance with Section 203.3(a)(12)(g)
hereinbelow), then the deadline in Item 36 of the Schedule of Performance shall be extended to
December 31, 2014.
(2) In the event Developer receives the Fifth Extension pursuant to
subparagraph (1) above and thereafter conveyance to Developer of the long-term leasehold
interest in Parcel C occurs prior to December 31, 2014, then, within thirty (30) days after the
closing date for the long-term Parcel C lease, Agency shall, or shall cause the City to, promptly
refund to Developer the pro rata monthly portion of the Fifth Extension Payment (after taking
into account any credits to which Developer is entitled under Section 203.3(a)(12)(g)) for the
number of months remaining between the date of conveyance to Developer of the long-term
leasehold interest in Parcel C and December 31, 2014. For illustrative purposes only, if
Developer receives the Fifth Extension, Developer is entitled to a $130,000 credit against the
Fifth Extension Payment pursuant to Section 203.3(a)(12)(g), and conveyance to Developer of
the long-term leasehold interest in Parcel C occurs on July 1, 2014, then the amount of the refund
to which Developer is entitled (in addition to the credit) shall be Sixty Thousand Dollars
($60,000) ($250,000 Fifth Extension Payment less $130,000 credit = $120,000 payment, or
$10,000 pro rata monthly payment amount, multiplied by 6 months for the time period between
July 1, 2014, and December 31, 2014, _ $60,000).
(e)(1) An extension provided in accordance with this subsection (e) is
sometimes hereinafter referred to as the "Sixth Extension." In the event Developer receives the
Second Extension, the Third Extension, the Fourth Extension, and the Fifth Extension and
thereafter Developer desires to extend by one additional year the December 31, 2014, deadline
for satisfaction of the conditions precedent for conveyance of the long-term leasehold interest in
Parcel C and the December 31, 2014, closing date (see Item 36 of the Schedule of Performance
as previously extended in accordance with subsections (a), (b), (c), and (d) above), Developer
shall provide written notice to the Agency Executive Director of Developer's election to so
extend such deadlines no later than October 31, 2014. Without limiting any rights or remedies of
the City or Agency or any notice and cure periods under any Parcel C Agreement, and only for
purposes of the extension provisions of this Section 12: (A) the Agency Executive Director shall
have until November 30, 2014, to provide to Developer a Parcel C Default Notice; and (B) in the
event a Parcel C Default Notice is timely provided to Developer, Developer shall have until
December 31, 2014, to cure any such Parcel C Default. If and only if by December 31, 2014,
Developer has both cured any such Parcel C Default and paid to City the sum of Two Hundred
Fifty Thousand Dollars ($250,000) ("Sixth Extension Payment") (subject to any credit against
the Sixth Extension Payment to which Developer is entitled in accordance with Section
203.3(a)(12)(g) hereinbelow), then the deadline in Item 36 of the Schedule of Performance shall
be extended to December 31, 2015.
(2) In the event Developer receives the Sixth Extension pursuant to
subparagraph (1) above and thereafter conveyance to Developer of the long-term leasehold
interest in Parcel C occurs prior to December 31, 2015, then, within thirty (30) days after the
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closing date for the long-term Parcel C lease, Agency shall, or shall cause the City to, promptly
refund to Developer the pro rata monthly portion of the Sixth Extension Payment (after taking
into account any credits to which Developer is entitled under Section 203.3(a)(12)(g)) for the
number of months remaining between the date of conveyance to Developer of the long-term
leasehold interest in Parcel C and December 31, 2015. For illustrative purposes only, if
Developer receives the Sixth Extension, Developer is entitled to a $130,000 credit against the
Sixth Extension Payment pursuant to Section 203.3(a)(12)(g), and conveyance to Developer of
the long-term leasehold interest in Parcel C occurs on July 1, 2015, then the amount of the refund
to which Developer is entitled (in addition to the credit) shall be Sixty Thousand Dollars
($60,000) ($250,000 Sixth Extension Payment less $130,000 credit = $120,000 payment, or
$10,000 pro rata monthly payment amount, multiplied by 6 months for the time period between
July 1, 2015, and December 31, 2015, _ $60,000).
(f)(1) An extension provided in accordance with this subsection (f) is
sometimes hereinafter referred to as the "Seventh Extension." In the event Developer receives
the Second Extension, the Third Extension, the Fourth Extension, the Fifth Extension, and the
Sixth Extension and thereafter Developer desires to extend by one additional year the December
31, 2015, deadline for conveyance of the long-term leasehold interest in Parcel C and the
December 31, 2015, closing date (see Item 36 of the Schedule of Performance as previously
extended in accordance with subsections (a), (b), (c), (d), and (e) above), Developer shall provide
written notice to the Agency Executive Director of Developer's election to so extend such
deadlines no later than October 31, 2015. Without limiting any rights or remedies of the City or
Agency or any notice and cure periods under any Parcel C Agreement, and only for purposes of
the extension provisions of this Section 12: (A) the Agency Executive Director shall have until
November 30, 2015, to provide to Developer a Parcel C Default Notice; and (B) in the event a
Parcel C Default Notice is timely provided to Developer, Developer shall have until December
31, 2015, to cure any such Parcel C Default. If and only if by December 31, 2015, Developer
has (i) cured any such Parcel C Default, (ii) paid to City the sum of Two Hundred Fifty
Thousand Dollars ($250,000) ("Seventh Extension Payment") (subject to any credit against the
Seventh Extension Payment to which Developer is entitled in accordance with Section
203.3(a)(12)(g) hereinbelow), and (iii) with respect to the Seventh Extension only (and not the
Second Extension, Third Extension, Fourth Extension, Fifth Extension, or Sixth Extension
referred to in subsections (a), (b), (c), (d), and (e) above), Developer satisfies all of the
"Conditions Precedent to Seventh Extension" (as that term is hereinafter defined), then the
deadline in Item 36 of the Schedule of Performance shall be extended to December 31, 2016.
For purposes of this Section 203.3(a)(12)(0, Developer shall be deemed to have satisfied the
Conditions Precedent to Seventh Extension only if by December 31, 2016, (i) Developer shall
have satisfied all of the conditions precedent to conveyance of Parcel C set forth in Section
203.3(a)(l)-(11), inclusive, excepting only conditions (1) (Evidence of Financing), (8)
(insurance), and 11 (execution of lease); and (ii) Developer notifies Agency in writing that
notwithstanding Developer's diligent and good faith efforts to obtain financing prior to the
December 31, 2016, closing deadline Developer has determined, based on substantive
information from lenders or other third party experts in the hotel financing industry, that
financing to develop the development of Parcel C is either not available by that date or that
Developer requires additional time to document and close such financing; and (iii) Developer's
additionally notifies Agency in writing, based on substantive information from lenders or other
third party experts in the hotel financing industry, that financing is likely to become available
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prior to December 31, 2016, or, if financing has become available, that Developer has
determined that it is reasonable to expect that such financing will be documented and closed
prior to December 31, 2016.
(2) In the event Developer receives the Seventh Extension pursuant to
subparagraph (1) above and thereafter conveyance to Developer of the long-term leasehold
interest in Parcel C occurs prior to December 31, 2016, then, within thirty (30) days after the
closing date for the long-term Parcel C lease, Agency shall, or shall cause the City to, promptly
refund to Developer the pro rata monthly portion of the Seventh Extension Payment (after taking
into account any credits to which Developer is entitled under Section 203.3(a)(12)(g)) for the
number of months remaining between the date of conveyance to Developer of the long-term
leasehold interest in Parcel C and December 31, 2016. For illustrative purposes only, if
Developer receives the Seventh Extension, Developer is entitled to a $130,000 credit against the
Seventh Extension Payment pursuant to Section 203.3(a)(12)(g), and conveyance to Developer
of the long-term leasehold interest in Parcel C occurs on July 1, 2016, then the amount of the
refund to which Developer is entitled (in addition to the credit) shall be Sixty Thousand Dollars
($60,000) ($250,000 Seventh Extension Payment less $130,000 credit = $120,000 payment, or
$10,000 pro rata monthly payment amount, multiplied by 6 months for the time period between
July 1, 2016, and December 31, 2016, = $60,000).
(g) Developer shall be entitled to a credit against the Second Extension
Payment, the Third Extension Payment, the Fourth Extension Payment, the Fifth Extension
Payment, the Sixth Extension Payment, and the Seventh Extension Payment (but not the First
Extension Payment) equal in amount to the sum of all of Developer's actual and reasonable costs
paid to third parties (limited to architects, engineers, designers, environmental consultants,
artists, renderers, model builders, computer graphics professionals, photographers, printers and
reproduction companies, furnishing vendors and contractors engaged in constructing model and
mock-up guestrooms, cost consultants, and general contractor, but excluding any fees paid to the
City, Agency, or any other governmental agency) incurred to plan, design, engineer, seek
financing for, prepare, submit, and process plans and permits with City, Agency, and other
governmental agencies with jurisdiction related to the development on Parcel C and the Hilton
Parcel of an expanded hotel consistent with the "Proposal" submitted by Developer to Agency as
referred to in Recital C to this Fifth Implementation Agreement (collectively, the "Eligible
Expenses"), provided that Eligible Expenses for which Developer is entitled to such credit
against its Second Extension Payment and Third Extension Payment must have been incurred
between January 1, 2009, and the close of escrow for the conveyance of the long-term Lease for
Parcel C to The Waterfront Hotel, LLC, or approved successor or assignee, Eligible Expenses for
which Developer is entitled to such credit against its Fourth Extension Payment must have been
incurred between January 1, 2010, and the close of escrow for the conveyance of the long-term
Lease for Parcel C to The Waterfront Hotel, LLC, or approved successor or assignee, and
Eligible Expenses for which Developer is entitled to such credit against its Fifth Extension
Payment, Sixth Extension Payment, and Seventh Extension Payment must have been incurred
between July 1, 2011, and the close of escrow for the conveyance of the long-term Lease for
Parcel C to The Waterfront Hotel, LLC, or approved successor or assignee. Developer shall
submit its Eligible Expenses to Agency's Executive Director or designee from time to time,
together with such supporting documentation as may be reasonably requested by the Executive
Director or designee to enable him or her to verify that the expenses are Eligible Expenses for
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the period in question. Agency's Executive Director's or designee's approval shall not be
unreasonably withheld, conditioned, or delayed and any disapproval shall be in writing and shall
state the reasons therefor. Developer shall not delay payment of an Extension Payment that is
due and owing on the basis that Developer anticipates receiving a credit for Eligible Expenses at
a later date. Eligible Expenses shall be credited against the first Extension Payment(s) due
hereunder regardless of the time incurred by Developer and in the event Developer has paid an
Extension Payment or Payments prior to the time a credit for Eligible Expenses has been
provided, Agency shall refund the amount of the Eligible Expenses within thirty (30) days after
receipt of Developer's request for a credit or refund (but in no event shall Agency be required to
refund an amount that would result in any actual out-of-pocket payment by Developer to Agency
for any single Extension Payment being reduced to a level less than $50,000). Thus, for
example, if Developer pays the Second Extension Payment of $250,000 and sixty (60) days
thereafter Agency's Executive Director or designee approves a credit of $100,000 in Eligible
Expenses for the period covered by the Second Extension Payment, Agency shall refund the sum
of $100,000 to Developer within thirty (30) days after the Executive Director's or designee's
approval and if Developer pays the Second Extension Payment of $250,000 and sixty (60) days
thereafter Agency's Executive Director or designee approves a credit of $250,000 in Eligible
Expenses for the period covered by the Second Extension Payment, Agency shall refund the sum
of $200,000 to Developer (the maximum amount of the credit/refund for the period covered by
the Second Extension Payment and Developer shall carry over an additional $50,000 in Eligible
Expenses to be credited against the Third Extension Payment if and when due.
(h) "Parcel C Agreements" as used in this Agreement shall mean each of the
following: (1) the Existing Agreement, as modified by this Fifth Implementation Agreement, to
the extent the same pertain to Parcel C; (2) that certain Interim Short -Term Lease that was
entered into by and between Agency, as landlord, and Developer, as tenant, with respect to
Parcel C on or about April 14, 1999, as memorialized in the memorandum of lease recorded on
April 19, 1999, as Instrument No. 19990285625 and April 7, 2000, as Instrument No.
20000179415 in the Official Records of Orange County, California (the "Interim Short -Term
Lease"), which Interim Short -Term Lease was subsequently assigned by Developer to The
Waterfront Hotel, LLC, and subsequently reassigned by The Waterfront Hotel, LLC, to
Developer pursuant to that certain Assignment of Lease dated as of August 29, 2006, that was
recorded on August 30, 2006, as Instrument No. 2006000582100 in the Official Records of
Orange County, California; (3) that certain License Agreement to Provide Landscaping and other
Improvements in the Public Right of Way dated February 20, 2001, that was entered into by and
among the City of Huntington Beach, The Waterfront Hotel, LLC, and Developer and was
recorded on April 18, 2001, as Instrument No. 20010232765 in the Official Records of Orange
County, California (the "License Agreement"), which License Agreement was subsequently
assigned by The Waterfront Hotel, LLC, to Developer with respect to Parcel C pursuant to that
certain Assignment of License Agreement to Provide Landscaping and other Improvements in
the Public Right -of -Way dated as of August 29, 2006, and recorded on August 30, 2006, as
Instrument No. 2006000582012 in the Official Records of Orange County, California; (4) that
certain Reciprocal Fire Lane Access Easement Agreement dated as of August 30, 1995, that was
entered into by and between Agency, Robert L. Mayer, as Trustee of the Robert L. Mayer Trust
of 1982, dated June 22, 1982, as amended, and Waterfront Construction No. 1, and was recorded
on September 1, 1995, as Instrument no. 95-0384750 in the Official Records of Orange County,
California; (5) that certain Waterfront Parking Easement Agreement dated as of August 29,
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2006, that was entered into by and between Developer and The Waterfront Hotel, LLC, and
consented to by Agency and recorded on August 30, 2006, as Instrument No. 2006000582103 in
the Official Records of Orange County, California; and (6) that certain Parcel C Parking
Easement Agreement dated as of August 29, 2006, that was entered into by and between
Developer and The Waterfront Hotel, LLC, and consented to by Agency and recorded on August
30, 2006, as Instrument No. 2006000582104 in the Official Records of Orange County,
California.
(i) The Parties shall cooperate in executing any documents necessary to
evidence the First Extension, Second Extension, Third Extension, Fourth Extension, Fifth
Extension, Sixth Extension, and Seventh Extension, as applicable.
0) Developer acknowledges and agrees that: (1) Agency and City are not
legally authorized to make, and Agency has not by executing this Agreement made, any
commitment or guaranty with respect to approval and certification of any discretionary action
which has not yet been approved or certified or any ministerial action dependent upon or
reasonably related to such discretionary action; (2) such approvals and certifications may only be
given after the relevant decision -making persons or bodies, exercising their independent
judgment, have acted in their governmental capacities to approve or deny each required
discretionary action in accordance with applicable laws, rules, and regulations; and (3) nothing in
this Agreement shall supersede, waive, limit, modify, or affect in any way the rights of Agency
or City with respect to any discretionary or regulatory approvals required to be obtained from
any governmental entities under applicable federal, state or local laws; (4) nothing in this
Agreement shall supersede, waive, limit, modify, or affect in any way timelines, submissions,
approvals, or any other matter under the Permit Streamlining Act (Government Code Section
65920 et seq.); and (5) Developer's previous submittal of a Proposal, as referred to in Recital C
of this Fifth Implementation Agreement, does not constitute satisfaction of Item 27 in the
Schedule of Performance."
2. Attachment No. 5 to the Existing Agreement is hereby replaced in its entirety with
a new Attachment No. 5, a copy of which is attached hereto as Exhibit No. 1 to this Fifth
Implementation Agreement; provided, it is understood and agreed that nothing in this Fifth
Implementation Agreement is intended to modify, amend, or supersede the existing lease
between Agency and The Waterfront Hotel LLC pertaining to the Waterfront Hilton Beach
Resort prior to Agency's conveyance of the long-term leasehold interest in Parcel C. At such
time that conveyance of the long-term leasehold interest in Parcel C is scheduled to occur and the
"Agreement Date" for the lease set forth in Attachment No. 5 has been determined, which lease
will at that time cover the combined Waterfront Hilton Beach Resort parcel and Parcel C,
Agency and Developer shall cause the Base Rent figures in Section 301 to be determined and
inserted in said lease. Attachment No. 5-C to the Existing Agreement is hereby deleted.
3. Pursuant to Section 316 of the Existing Agreement, Agency agrees that The
Waterfront Hotel, LLC, is an approved Transferee of the long-term leasehold interest in Parcel
C.
4. To the extent that City retains an ownership interest in and to either Parcel C or
the Waterfront Hilton Parcel, City covenants to perform and expressly assumes all of Agency's
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obligations set forth in the Existing Agreement, as modified by this Fifth Implementation
Agreement, and all of the references to Agency in the Existing Agreement, as modified by this
Fifth Implementation Agreement, shall be deemed to refer to City. Not by way of limitation of
the foregoing, in the event that City retains such an ownership interest in and to either Parcel C
or the Waterfront Hilton Parcel as of the date that the long-term leasehold interest in Parcel C is
to be conveyed to The Waterfront Hotel, LLC, or its approved successor or assignee, in
accordance with Section 203.3 of the Existing Agreement, as modified by this Fifth
Implementation Agreement, the Parties shall cooperate in modifying the form of the lease
attached hereto as Exhibit No. 1 to reflect that City, not Agency, is the landlord. The Parties
agree that Developer's rights and obligations set forth in the Existing Agreement, as modified by
this Fifth Implementation Agreement, shall survive the suspension of Agency's powers and/or
the dissolution of Agency pursuant to any pending or future legislation and that in the event
Agency is dissolved by pending or future legislation either (i) City shall become the "successor
agency" to Agency and shall assume and become subject to any rights and obligations of Agency
hereunder and with respect to the lease(s) of Parcel C and the Waterfront Hilton Parcel or (ii)
City shall take such steps as may be reasonably required under any applicable legislation to
implement and accomplish the purposes of the Parcel C Agreements.
5. Except as set expressly set forth herein, each and every term set forth in the
Existing Agreement shall remain in full force and effect.
6. Upon the conveyance of Parcel C to The Waterfront Hotel, LLC, or its approved
successor or assignee, in accordance with Section 203.3 of the Existing Agreement, as modified
by this Fifth Implementation Agreement, the Existing Agreement, as modified by this Fifth
Implementation Agreement, shall be deemed to have been fully performed and shall thereafter be
terminated and of no further force or effect; provided, however, that the "Schedule of Feasibility
Gap Payments" (Attachment No. 8 to the Existing Agreement, as modified and restated in the
Second Implementation Agreement), any indemnity provisions set forth in the Existing
Agreement that are intended to survive such conveyance, and such other provisions of the
Existing Agreement that need to survive in order to allow for the interpretation and enforcement
of the Schedule of Feasibility Gap Payments shall all survive and be enforceable in accordance
with the terms set forth therein.
7. This Fifth Implementation Agreement may be executed by Agency, City, and
Developer in different counterparts and the signature pages combined to create a single
document binding on both Parties.
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IN WITNESS WHEREOF, the parties have executed this Fifth Implementation
Agreement to Amended and Restated Disposition and Development Agreement as of the date set
forth above.
"AGENCY"
REDEVELOPMENT AGENCY OF THE
CITY OFrTINGTON H,
a public borpo and politic
Dated: May 25 12011 �Byy
ATTEST:
AND APPROVED
Executive Director
APPROVED AS TO FORM:
Kane, Ballmer & Berkman
Agency Special Counsel
Chairman
AS TO FORM:
q/;U,/zeaV
General Counsel
INITIATED AND APPROVED:
Director of Economic De elopment
Deputy Executive Dire r
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PAGE FOLLOWS.]
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-11-
IN WITNESS WHEREOF, the parties have executed this Fifth Implementation
Agreement to Amended and Restated Disposition and Development Agreement as of the date set
forth above.
Dated:
ATTEST:
Agency Clerk
2011
REVIEWED AND APPROVED:
Executive Director
APPROVED AS TO FORM:
�an,B 1I e Berkman
Agency Special Counsel
"AGENCY"
REDEVELOPMENT AGENCY OF THE
CITY OF HUNTINGTON BEACH,
a public body, corporate and politic
By:
Chairman
APPROVED AS TO FORM:
Agency General Counsel
INITIATED AND APPROVED:
Director of Economic Development
Deputy Executive Director
COUNTERPART
RT
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PAGE FOLLOWS.]
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Dated: May 25 , 2011
ATTEST:
AND APPROVED
( . City Manager
APPROVED AS TO FORM:
Kane, Ballmer & Berkman
City Special Counsel
"CITY"
CITY OF HUNTINA�ion
BEACH,
a mudwlnal corn
VED A$ TO FORM:
Zv /7 v/%
/" City Attorney
INITIATED AND APPROVED:
z�jA
Director of Economic De lopment
"DEVELOPER"
MAYER FINANCIAL, L.P.,
a California limited partnership
By: RLM Management, Inc., a California
corporation, its General Partner
Dated: 12011 By:
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-12-
"CITY"
CITY OF HUNTINGTON BEACH,
a municipal corporation
Dated: , 2011 By:
Mayor
ATTEST: APPROVED AS TO FORM:
City Clerk
REVIEWED AND APPROVED
City Manager
APPROVED AS TO FORM:
Kane, Ballm & Berkman
City Special Counsel
Dated:
2011
City Attorney
INITIATED AND APPROVED:
Director of Economic Development
"DEVELOPER"
MAYER FINANCIAL, L.P.,
a California limited partnership
By: RLM Management, Inc., a California
corporation, its General Partner
In
Robert L. Mayer, Jr.
President
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EXHIBIT NO. 1
ATTACHMENT NO. 5 TO AMENDED AND RESTATED
DISPOSITION AND DEVELOPMENT AGREEMENT
FORM OF LEASE
112/017963-0011
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AMENDED AND RESTATED GROUND LEASE
By and Between
REDEVELOPMENT AGENCY OF THE
CITY OF HUNTINGTON BEACH,
AGENCY,
and
THE WATERFRONT HOTEL, LLC,
a California limited liability company
LESSEE
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TABLE OF CONTENTS
Page
I. [§ 100] DEFINED TERMS; SUBJECT OF GROUND LEASE......................................4
A. [§ 101] Defined Terms..........................................................................................4
B. [§ 102] Purpose of the Lease; Amendment of Hilton Parcel Lease and
Termination of Parcel C Lease.............................................................................9
C. [§ 103] The Redevelopment Plan.......................................................................10
D. [§ 104] Condition of the Site..............................................................................10
II. [§ 200] LEASE OF THE SITE.......................................................................................13
A.
[ § 201 ] Lease.......................................................................................................13
B.
[§ 202] Term of the Lease...................................................................................14
III. [§ 300]
RENT.................................................................................................................14
A.
[§ 301] Construction Period Rent.......................................................................14
B.
[§ 302] Base Rcnt................................................................................................14
C.
[§ 303] Participation Rent...................................................................................15
D.
[§ 304] Triple Net Lease.....................................................................................16
E.
[§ 305] Non -Subordination of Rent or Other Sums............................................16
F.
[§ 306] Delinquency In Rental Payment; Collection of Rents ...........................16
G.
[§ 307] Right to Inspection and Audit of Records..............................................17
IV. [§ 400]
DEVELOPMENT OF HOTEL ADDITION ON THE SITE .............................17
A.
[§ 401] Development to Be in Accordance With Approved Permits,
Plans, Drawings, and Specifications; Schedule of Performance ........................17
B.
[§ 402] No Construction Before Notice..............................................................17
C.
403 Notice of Non -Responsibility
18
D.
[§ 404] Mechanic's, Materialman's, Contractor's or Subcontractor's
Liens....................................................................................................................18
E.
[§ 405] Rights of Access.....................................................................................19
F.
[§ 406] Local, State and Federal Laws...............................................................19
G.
[§ 407] Non-discrimination During Construction...............................................19
H.
[§ 409] Archaeological Provisions......................................................................19
I.
[§ 410] Release of Construction Covenants........................................................19
V. [§ 500] USE OF THE SITE AND CITY BEACH PROPERTY....................................20
A. [§ 501 ] Use of the Site and Improvements.........................................................20
B. [§ 502] Management Agreement and Franchise Agreement..............................23
C. [§ 503] Obligation to Refrain from Discrimination............................................24
D. [§ 504] Form of Nondiscrimination and Nonsegregation Clauses .....................24
E. [§ 505] Quiet Enjoyment....................................................................................25
VI. [§ 600] UTILITIES, TAXES, ASSESSMENTS, AND OTHER CHARGES................29
A. [§ 601] Utilities...................................................................................................29
B. [§ 6021 Impositions (Including Taxes and Assessments)...................................29
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Page
C. [§ 603] Payment Generally.................................................................................29
D.
[§ 604] Payment of Impositions in Installments.................................................30
E.
[§ 605] Agency Right to Cure.............................................................................30
F.
[§ 606] Tax Receipts...........................................................................................31
G.
[§ 607] Limits of Tax Liability...........................................................................31
H.
[§ 608] Contests..................................................................................................31
I.
[§ 609] Notice of Possessory Interest: Payment of Taxes and
Assessments on Value of Entire Property...........................................................32
J.
[§ 610] Other Liens.............................................................................................33
VII. [§ 700] OWNERSHIP OF AND RESPONSIBILITY FOR IMPROVEMENTS ..........33
A.
[§ 701] Ownership During Term and at Termination.........................................33
B.
[§ 702] Removal of Fixtures and Furnishings at Termination ............................33
C.
[§ 703] Maintenance and Repair of Improvements............................................34
D.
[§ 704] Waste......................................................................................................34
E.
[§ 705] Alteration of Improvements...................................................................34
F.
[§ 706] Damage to or Destruction of Hotel and Improvements .........................35
G.
[§ 710] Damage or Destruction During Final Years of Term .............................36
H.
[§ 711] Faithful Performance and Labor and Material (Payment)
Bonds: Indemnification; Nonresponsibility Notices..........................................37
VIII. [§ 800] ASSIGNMENT, SUBLETTING, TRANSFER.................................................38
A. [§ 801] Warranty Against Speculation..............................................................38
B. [§ 802] Prohibition Against Transfer..................................................................38
C. [§ 803] Investigation of Proposed Transferee; Costs..........................................41
IX. [§ 900] MORTGAGES...................................................................................................43
A. [§ 901 ] Leasehold Mortgages.............................................................................43
B. [§ 902] Rights and Obligations of Leasehold Mortgagees.................................44
C. [§ 903] Agency's Forbearance and Right to Cure Defaults on
LeaseholdMortgages.......................................................................................... 47
D. [§ 904] Notice.....................................................................................................47
E. [§ 905] Forbearance by Agency..........................................................................47
F. [§ 906] Performance on Behalf of Lessee...........................................................48
G. [§ 907] Nonmerger..............................................................................................49
H. [§ 908] Agency Cooperation...............................................................................49
I. [§ 909] Enforceability.........................................................................................49
J. [§ 910] No Subordination of Agency's Interests................................................49
K. [§ 911] Certificates to Lenders...........................................................................50
L. [§ 912] Obligations of Mortgagee Upon Acquisition of Leasehold
Estate................................................................................................................... 50
X. [§ 1000] INDEMNIFICATION AND INSURANCE....................................................50
A. [§ 1001] Indemnification....................................................................................50
B. [§ 1002] Required Insurance...............................................................................51
C. [§ 1003] Definition of "Full Insurable Value"....................................................52
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Page
D. [§ 1004] General Insurance Provisions...............................................................52
E. [§ 10051 Failure to Maintain Insurance..............................................................53
F. [§ 1006] Disposition of Insurance Proceeds Resulting from Loss or
Damageto Improvements................................................................................... 54
XI. [§ 1100] EMINENT DOMAIN......................................................................................54
A. [§ 1101] Lessee to Give Notice..........................................................................54
B. [§ 1102] Total Taking.........................................................................................54
C. [§ 1103] Partial Taking.......................................................................................55
D. [§ 11041 Application of Awards and Other Payments........................................55
XII. [§ 1200] DEFAULTS, REMEDIES AND TERMINATION.........................................56
A. [§ 12011 Defaults - General................................................................................56
B. [§ 1202] Legal Actions.......................................................................................56
C. [§ 1207] Rights and Remedies are Cumulative..................................................57
D. [§ 1208] Damages...............................................................................................57
E. [§ 1209] Specific Performance...........................................................................57
F. [§ 1210] Additional Remedies of Agency..........................................................58
G. [§ 1211] Remedies and Rights of Termination...................................................59
H. [§ 1212] No Cross Defaults................................................................................61
XIII. [§
1300] GENERAL PROVISIONS...............................................................................61
A.
[§ 1301] Notices, Demands, and Communications between the Parties ............61
B.
[§ 1302] Time of Essence...................................................................................61
C.
[§ 1303] Conflict of Interests..............................................................................61
D.
[§ 1304] Nonliability of Agency Officials and Employees................................61
E.
[§ 1305] Inspection of Books and Records.........................................................62
F.
[§ 13061 No Partnership......................................................................................62
G.
[§ 1307] Compliance with Law..........................................................................62
H.
[§ 1308] Surrender of Property...........................................................................62
I.
[§ 1309] Severability...........................................................................................62
J.
[§ 1310] Binding Effect......................................................................................63
K.
[§ 1311 ] Assignment or Sublease to City: Right of First Refusal ......................63
L.
[§ 1312] Captions................................................................................................64
M.
[§ 1313] No Recording of this Lease..................................................................64
N.
[§ 1314] Enforced Delay in Performance for Causes Beyond Control of
Party....................................................................................................................
64
O.
[§ 1315] Entire Agreement, Waivers and Amendments.....................................64
P.
[§ 1316] Off -set statement, Attornment and Subordination...............................65
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LIST OF EXHIBITS
EXHIBIT "A" LEGAL DESCRIPTION OF THE SITE
EXHIBIT "B" MAP OF THE SITE
EXHIBIT "C" DESCRIPTION OF THE CITY BEACH PROPERTY
EXHIBIT "D" FIRST AMENDED MEMORANDUM OF LEASE
CONTAINING A RESTRICTIVE COVENANT
EXHIBIT "E" AMENDED MEMORANDUM OF LEASE
EXHIBIT "F" RELEASE OF CONSTRUCTION COVENANTS
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AMENDED AND RESTATED GROUND LEASE
This Amended And Restated Ground Lease (this "Lease") is dated for reference purposes
as of the day of , 20_ (the "Agreement Date"), and is being made and
entered into by and between the REDEVELOPMENT AGENCY OF THE CITY OF
HUNTINGTON BEACH, a public agency ("Agency"), and THE WATERFRONT HOTEL,
LLC, a California limited liability company ("Lessee") (individually, a "Party," and
collectively, the "Parties").
RECITALS:
A. Agency, as lessor, and Waterfront Construction No. 1, a California limited
partnership, as lessee, previously entered into that certain ground lease dated as of April 28, 1989
(the "Hilton Parcel Lease"), for the development and operation of a hotel and related
improvements (collectively, the "Existing Hotel")on that certain real property located generally
at the northeast corner of Pacific Coast Highway and Huntington Street in the City of Huntington
Beach, County of Orange, State of California more particularly described in Exhibit "A" and
depicted in Exhibit "B" hereto (the "Hilton Parcel"). A memorandum of the Hilton Parcel
Lease was recorded on April 28, 1989, as Instrument No. 89-225546 in the Official Records of
Orange County, California. Pursuant to that certain Lease Assignment and Assumption
Agreement entered into by and among the Robert L. Mayer, Trustee of the Robert L. Mayer
Trust of 1982 dated June 22, 1982, as amended (the "Mayer Trust"), Waterfront Construction
No. 1, and Lessee that was approved and consented to by Agency and recorded in the Official
Records of the Orange County Recorder's Office as Instrument No. 19970338159 on July 17,
1997, Waterfront Construction No. 1 assigned its right, title, and interest in and to the Hilton
Parcel Lease and the Hilton Parcel to Lessee and Lessee assumed Waterfront Construction No.
1's obligations with respect thereto.
B. Agency and Mayer Financial, L.P., a California limited partnership
("Developer"), previously entered into that certain Amended and Restated Disposition and
Development Agreement dated as of September 14, 1998 (the "Original DDA"), as amended by
that certain First Implementation Agreement to Amended and Restated Disposition and
Development Agreement dated as of May 15, 2000 (the "First Implementation Agreement"),
that certain Second Implementation Agreement to Amended and Restated Disposition and
Development Agreement dated as of February 5, 2001 (the "Second Implementation
Agreement"), that certain Third Implementation Agreement to Amended and Restated
Disposition and Development Agreement dated as of October 20, 2008 (the "Third
Implementation Agreement"), that certain Fourth Implementation Agreement to Amended and
Restated Implementation Agreement dated as of October 18, 2010 (the "Fourth
Implementation Agreement"), and that certain Fifth Implementation Agreement to Amended
and Restated Disposition and Development Agreement dated as of , 201_ (the "Fifth
Implementation Agreement") (with the Original DDA, the First Implementation Agreement,
the Second Implementation Agreement, the Third Implementation Agreement, the Fourth
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Implementation Agreement, and the Fifth Implementation Agreement being collectively referred
to herein as the "DDA"). The DDA provides for the phased disposition of the "Site" described
therein (which includes both the parcels that are the subject of this Lease and other adjacent real
property) and the development and operation by Developer of certain improvements thereon,
including without limitation hotel improvements on Parcel C referred to hereinbelow.
C. The City of Huntington Beach ("City"), Lessee, and Developer previously
entered into that certain Amended and Restated Development Agreement dated as of September
21, 1998, that was recorded on October 21, 1998, as Instrument No. 19980711512 in the Official
Records of the Orange County Recorder's office and re -recorded on December 7, 1998, as
Instrument No. 19980838602 in said Official Records, as amended by that certain First
Amendment to Amended and Restated Development Agreement dated as of , 201,
that was recorded on , 201 , as Instrument No. in the Official
Records of the Orange County Recorder's office (collectively, the "Development Agreement").
The Development Agreement applies to the Site which is the subject of this Lease and other
adjacent real property. The Development Agreement vests certain rights of Lessee with respect
to development and operation of the Existing Hotel and the Hotel Addition and Expanded Hotel
that are referred to herein, as more particularly set forth in the Development Agreement.
D. Pursuant to the Original DDA, on or about March 16, 1999, Agency, as lessor,
and Lessee, as lessee, previously entered into that certain Interim Short -Term Lease (the "Parcel
C Lease") relating to that certain real property located adjacent to the Hilton Parcel and more
particularly described in Exhibit "A" and depicted in Exhibit 1113" hereto ("Parcel C").
A memorandum of the Parcel C Lease was recorded on April 19, 1999, as Instrument No.
19990285625 and on April 7, 2000, as Instrument No. 20000179415 in the Official Records of
Orange County, California. On or about August 29, 2006, Lessee assigned its right, title, and
interest in the Parcel C Lease to Developer and Developer assumed Lessee's obligations under
the Parcel C Lease from Lessee pursuant to that certain Assignment of Lease that was recorded
in the Official Records of the Orange County Recorder's Office on August 30, 2006, as
Instrument No. 2006000582100.
E. The Mayer Trust, Waterfront Construction No. 1, and Agency previously entered
into that certain Reciprocal Fire Lane Access Easement Agreement (the "Fire Lane Easement
Agreement") dated as of August 30, 1995, which Fire Lane Easement Agreement was recorded
on September 1, 1995, as Instrument No. 95-0384750 in the Official Records of Orange County,
California. Pursuant to that certain Assignment and Assumption of Easements dated July 30,
1997, which was recorded on August 1, 1997, as Instrument No. 19970367563 in the Official
Records of Orange County, California, Waterfront Construction No. 1 assigned its interest in the
Fire Lane Easement Agreement to Lessee. Due to the common fee and leasehold ownership of
the Hilton Parcel and Parcel C during the time Lessee was the lessee under both the Hilton Parcel
Lease and the Parcel C Lease, the parties' interests with respect to the Fire Lane Easement
Agreement merged and, accordingly, when Lessee assigned its rights to Developer under the
Parcel C Lease, Agency. Lessee, and Developer entered into that certain Easement Agreement
(Reaffirmation) dated August 29, 2006, and recorded as Instrument No. 2006000582101 in the
Official Records of Orange County that reaffirms the binding effect of the Fire Lane Easement
Agreement.
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F. City, Lessee, and Developer previously entered into that certain License
Agreement to Provide Landscaping and other Improvements in the Public Right -of -Way dated
February 20, 2001, which was recorded on April 18, 2001, as Instrument No. 20010232765 in
the Official Records of Orange County, California (the "License Agreement"). On August 29,
2006, City, Lessee, and Developer entered into that certain Assignment of License Agreement to
Provide Landscaping and other Improvements in the Public Right -of -Way (the "License
Agreement Assignment"), which License Agreement Assignment agreement was recorded as
Instrument No. 2006000582102 on August 30, 2006, in the Official Records of Orange County,
California. Pursuant to the License Agreement Assignment, Lessee's rights and obligations
under the License Agreement with respect to Parcel C were assigned to Developer. Concurrently
with the execution of this Lease, City, Lessee, and Developer are entering into that certain
Re -Assignment of License Agreement to Provide Landscaping and other Improvements in the
Public Right -of -Way (the "License Agreement Re -Assignment"), which License Agreement
Re -Assignment will be recorded in the Official Records of Orange County, California, and will
re -assign from Developer to Lessee Developer's obligations under the License Agreement with
respect to Parcel C.
G. Developer and Lessee previously entered into the following agreements relating
to parking rights and obligations pertaining to the Hilton Parcel and Parcel C (collectively, the
"Parking Easements"): (i) that certain Waterfront Parking Easement Agreement dated as of
August 29, 2006, recorded on August 30, 2006, as Instrument No. 2006000582103 in the
Official Records of Orange County, California; and (ii) that certain Parcel C Parking Easement
dated as of August 29, 2006, recorded on August 30, 2006, as Instrument No. 2006000582104 in
the Official Records of Orange County, California.
H. Pursuant to the DDA, Agency and Lessee desire to enter into this Lease to (i)
terminate the Parcel C Lease (including without limitation the form of parking easement
agreement attached thereto), (ii) terminate the Parking Easements, (iii) terminate the Fire Lane
Easement Agreement, and (iv) supersede and amend the Hilton Parcel Lease by expanding the
description of the leased premises (the "Site," as that term is defined in Section 104 hereinbelow)
to include both the Hilton Parcel and Parcel C, by providing for Lessee to develop an expansion
to the Existing Hotel on the Site (sometimes referred to herein as the "Hotel Addition," together
with the Existing Hotel the "Expanded Hotel") in accordance with Article IV of this Lease, by
revising the Term and Ground Rent provisions for this Lease in order to accommodate the
consolidation of the Hilton Parcel and Parcel C into a single ground lease, by making Lessee's
obligations to perform its obligations under the License Agreement as to the entire Site an
obligation of Lessee under this Lease, and by making such other revisions to the Hilton Parcel
Lease (applicable to the expanded Site) as are set forth herein.
For good and valuable consideration, the receipt and sufficiency of which is
acknowledged by both Parties, Agency and Lessee agree as follows:
COVENANTS:
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I. [§ 100] DEFINED TERMS; SUBJECT OF GROUND LEASE
A. [§ 101] Defined Terms.
In addition to any terms defined elsewhere in this Lease, the following defined terms
shall have the meanings ascribed below:
"Accountant" shall have the meaning ascribed to that term in Section 302(2) of this
Lease.
"Adjusted Room Revenue" shall mean the amount by which (a) Gross Room Revenue
for each Operating Year commencing in the Third Operating Year and continuing for the balance
of the Term exceeds (b) the product derived by multiplying the sum of twenty-five million
dollars ($25,000,000) times the Adjustment Factor, and with said product then rounded to the
nearest one thousand dollars ($1,000), and with said product increased on the first day of that
Operating Year beginning on the first day of the Fourth Operating Year in proportion to the
escalation, if any, of the Consumer Price Index during the immediately preceding calendar year;
provided, however, that such increase in the threshold revenue base calculated pursuant to this
clause (b) shall not in any single year exceed five percent (5%) of the preceding year's threshold
revenue base and shall not in any five-year period exceed twenty percent (20%) of the revenue
threshold base at the commencement of the five-year period.
"Adjustment Factor" shall mean the product of the following three factors: (a) the
Consumer Price Index for the month in which the Agreement Date occurs divided by one
hundred seventy-six and sixty hundredths (176.60) (the Consumer Price Index for April 2001,
the month in which the lease term commenced for the Hyatt Regency Huntington Beach Resort
and Spa); multiplied by (b) the total net number of hotel rooms in the Expanded Hotel divided by
517 (the number of hotel rooms in the Hyatt Regency Huntington Beach Resort and Spa);
multiplied by (c) the dividend obtained by dividing the average RevPAR for the Existing Hotel
for the thirty-six (36) month period immediately preceding one full calendar month preceding the
Agreement Date by the RevPAR for the Hyatt Regency Huntington Beach Resort and Spa for the
same period. With respect to the calculation to be made pursuant to clause (c) of the preceding
sentence, RevPAR means revenue per available room for the applicable period and shall equal
the dividend obtained by dividing Gross Room Revenue (as defined in this Lease) of the
applicable hotel for that period by "Rooms Available," for that same period, with "Rooms
Available" equal to the sum of "Total Rooms Occupied" and "Vacant Rooms," as those terms
are defined in the "Uniform System of Accounts for the Lodging Industry, Tenth Revised
Edition."
"Agency" shall mean the Redevelopment Agency of the City of Huntington Beach, a
public body, corporate and politic, exercising governmental functions and powers and organized
and existing under Chapter 2 of the Community Redevelopment Law of the State of California,
and any assignee of or successor to its rights, powers, and responsibilities.. As of the Agreement
Date, the principal office of Agency is located at 2000 Main Street, Huntington Beach,
California 92648.
"Agreement Date" shall mean the date first written above, which is , 201_
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"Base Rent" shall mean that portion of the Ground Rent required to be paid by Lessee to
Agency pursuant to Section 302 of this Lease.
"Business Day" shall have the meaning ascribed to that term in California Civil Code
Section 9. The term "days," when used instead of Business Days, shall mean calendar days.
"Certified Annual Statement" shall have the meaning ascribed to that term in Section
302(2) of this Lease.
"City" shall mean the City of Huntington Beach, a California charter city.
"Construction Period" shall mean the period of time that the Hotel Addition is under
construction, commencing with the earliest date that land grading, physical construction, and/or
delivery of building materials to the Site occurs (but in any event not earlier than the Agreement
Date and not later than sixty (60) days after the Agreement Date) and continuing through to the
day prior to the Operating Commencement Date.
"Construction Period Rent" shall mean that portion of the Ground Rent required to be
paid by Lessee to Agency during the Construction Period pursuant to Section 301 of this Lease.
"Consumer Price Index" shall mean the Consumer Price Index for all urban consumers,
(Los Angeles -Long Beach -Anaheim average) published by the United States Department of
Labor, Bureau of Labor Statistics or, if such index ceases to be published, the most closely
analogous substitute index.
"Cure Period" shall have the meaning ascribed to that term in Section 1201(a) of this
Lease.
"Date of Taking" shall having the meaning ascribed to that term in Section 1102 of this
Lease.
"Development Agreement" shall have the meaning ascribed to that term in Recital C of
this Lease.
"DDA" shall have the meaning ascribed to that term in Recital B of this Lease.
"Existing Hotel" means the hotel existing on the Hilton Parcel as of the Agreement Date.
The Existing Hotel consists of two hundred ninety (290) guestrooms plus ballroom, meeting
rooms, restaurant, and ancillary facilities.
"Expanded Hotel" means the hotel and ancillary facilities that will exist on the Site
when Lessee completes construction of the Hotel Addition to the Existing Hotel.
"Fire Lane Easement Agreement" shall have the meaning ascribed to that term in
Recital E of this Lease.
"First Operating Year" shall mean the period that begins on the Operating
Commencement Date and ends on either (i) the first December 31 which follows the Operating
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Commencement Date, in the event the Operating Commencement Date occurs during the period
commencing on January l and ending on August 31 of the calendar year in which the Operating
Commencement Date occurs; or (ii) the second December 31 which follows the Operating
Commencement Date, in the event the Operating Commencement Date occurs during the period
commencing on September 1 and ending on December 31 of the calendar year in which the
Operating Commencement Date occurs.
"Gross Room Revenue" shall mean all revenue of any kind or nature, determined on an
accrual basis, paid to Lessee or Lessee's agents for the rental of the Hotel guest rooms and suites
(but excluding meeting and banquet rooms and similar areas in the Hotel) rented, licensed, or
otherwise provided, whether on cash basis or credit by Lessee to third parties, excluding refunds
and uncollectible accounts (bad debts), including, without limitation,
(a) all room rental payments, room deposits forfeited, room cancellation fees; and
(b) proceeds of business interruption and similar insurance payable as a result of loss
of room revenues; and
(c) fees for use of any facilities which are customarily included by comparable first
quality hotels in the guest room rental rate, excluding, however, food, beverage, mini -bar, health
club, parking, telephone, and rentals for equipment not customarily provided guests of first class
resort hotels.
"Ground Rent" shall mean rent paid by Lessee to Agency for the Site. Ground Rent
consists of "Construction Period Rent" (as described in Section 301), "Base Rent" (as described
in Section 302), and "Participation Rent" (as described in Section 303).
"Hazardous Substance" shall have the meaning ascribed to that term in Section 104.1(a)
of this Lease.
"Hilton Parcel" means the portion of the Site more particularly described as Lot 1 of
Tract No. 13045 and Parcel 2 in Exhibit "A" attached hereto and depicted as the Hilton Parcel in
Exhibit "B" attached hereto.
"Hilton Parcel Lease" shall have the meaning ascribed to that term in Recital A of this
Lease.
"Hotel" shall mean, individually and collectively, the Existing Hotel, the Hotel Addition,
and the Expanded Hotel.
"Hotel Addition" shall mean the addition of approximately one hundred fifty-one (151)
net guestrooms, including a minimum of one hundred twenty-five (125) suites, to the Existing
Hotel on the Site, plus an additional ballroom, meeting rooms, restaurant, and ancillary facilities,
as approved by City prior to the Agreement Date per Conditional Use Permit No. 09-037 or such
other improvements as may be approved by City.
"Impositions" shall have the meaning ascribed to that term in Section 603 of this Lease.
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"Improvements" shall mean the Existing Hotel, the Hotel Addition, the Expanded Hotel,
and any and all other improvements to the Site, whether previously existing or constructed on the
Site by Lessee pursuant to this Lease, and including any and all amendments, modifications,
additions, substitutions, and replacements thereof.
"Last Partial Operating Year" as used herein means the period of less than twelve (12)
months that begins on an anniversary of the commencement of the Second Operating Year and
ends on the last day of the Term of this Lease.
"Lease" shall mean this Amended and Restated Lease.
"Lessee" shall mean THE WATERFRONT HOTEL, LLC, a California limited liability
company, whose manager is Waterfront Development, Inc., a California corporation, and any
permitted nominee or assignee of The Waterfront Hotel, LLC, as provided in Article VIII of this
Lease. As of the Agreement Date, the principal office of Lessee is located at 660 Newport
Center Drive, Suite 1050, Newport Beach, California 92660.
"License Agreement" shall have the meaning ascribed to that term in Recital E of this
Lease.
"Mayer 'Trust" means Robert L. Mayer, Trustee of the Robert L. Mayer Trust of 1982,
dated June 22, 1982, as amended.
"Mortgage" shall have the meaning ascribed to that term in Section 901(a) of this Lease.
"Mortgagee" shall have the meaning ascribed to that term in Section 901(a) of this
Lease.
"Net Awards and Payments" shall have the meaning ascribed to that term in Section
1104 of this Lease.
"Net Insurance Proceeds" shall have the meaning ascribed to that term in Section
708(c) of this Lease.
"Notices" shall have the meaning ascribed to that term in Section 1311.2(a) of this Lease.
"Offered Interest" shall have the meaning ascribed to that term in Section 1311.2(a) of
this Lease.
"Operating Commencement Date" shall mean the earlier to occur of (a) the date on
which construction of the Hotel Addition is substantially completed and the Expanded Hotel,
including the guest rooms situated within the portion of the Site currently consisting of Parcel C,
opens for business to the general public; or (b) the date on which a Certificate of Occupancy for
the Hotel Addition is first available in accordance with the normal procedures of City.
"Operating Year" shall mean (a) the First Operating Year; and (b) each calendar year
which follows the end of the First Operating Year and which ends prior to the Last Partial
Operating Year; and (c) the Last Partial Operating Year.
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"Parcel C" means the portion of the Site more particularly described as Lot 1 of Tract
No. 15535 in Exhibit "A" attached hereto and depicted as Parcel C in Exhibit `B" attached
hereto.
"Parcel C Lease" shall have the meaning ascribed to that term in Recital D of this Lease.
"Parking Easements" shall have the meaning ascribed to that term in Recital G of this
Lease.
"Participation Rent" shall mean that portion of the Ground Rent required to be paid by
Lessee to Agency pursuant to Section 303 of this Lease.
"Party" means either Agency or Lessee, as the context may dictate, and "Parties" means
Agency and Lessee.
"Project Costs" shall have the meaning ascribed to that term in Section 901(a)(3) of this
Lease.
"Redevelopment Plan" shall have the meaning ascribed to that term in Section 103 of
this Lease.
"Release of Construction Covenants" shall mean the document referred to in Section
410 of this Agreement that is to be issued by Agency and recorded by Lessee upon completion of
construction of the Hotel Addition.
"Restoration" shall have the meaning ascribed to that term in Section 708(b) of this
Lease.
"Second Operating Year" shall mean the calendar year which follows the end of the
First Operating Year.
"Site" shall mean that certain real property within the Merged Huntington Beach
Redevelopment Project Area described in the "Legal Description of the Site" and depicted in the
"Map of the Site" attached hereto as Exhibit "A" and Exhibit "B," respectively. The Site
includes all appurtenant rights and easements which are reasonably necessary to the proper
enjoyment of the tenancy created by this Lease, provided, however, that Agency reserves to
itself, its successors and assigns, together with the right to grant and transfer all or a portion of
the same, the following:
(a) Any and all oil, oil rights, petroleum, minerals, mineral rights, natural gas rights,
and other hydrocarbon substances by whatsoever name known, geothermal resources, and all
products derived from any of the foregoing, that may be within or under the land, together with
the perpetual right of drilling, mining, exploring, prospecting and operating therefor and storing
in and removing the same from the Site or any other land, including the right to whipstock or
directionally drill and mine from lands other than those leased hereby, oil or gas wells, tunnels,
and shafts into, through or across the subsurface of the Site, and to bottom such whipstocked or
directionally drilled wells, tunnels, and shafts under and beneath or beyond the exterior limits
thereof, and to redrill, retunnel, equip, maintain, repair, deepen, and operate any such wells or
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mines; without, however, the right to enter, drill, mine, store, explore, or operate on or through
the surface or the upper 500 feet of the subsurface of the Site; and
Any and all water, water rights or interests therein, no matter how acquired by Agency,
together with the right and power to explore, drill, redrill, remove, and store the same from the
Site or to divert or otherwise utilize such water, water rights, or interests on any other property
owned or leased by Agency, whether such water rights shall be riparian, overlying,
appropriative, percolating, littoral, prescriptive, adjudicated, statutory, or contractual; but
without, however, any right to enter upon the surface of the Site in the exercise of such rights
and, provided further, that the exercise of any such rights by Agency shall not result in any
damage or injury to the improvements constructed on the Site by Lessee, including without
limitation any subsidence of all or any part of such improvements.
"Term" shall have the meaning ascribed to that term in Section 202(a) of this Lease,
which is ninety-nine (99) years, commencing on the Agreement Date and terminating on the
ninety-ninth (99t'') anniversary of the Agreement Date, unless sooner terminated as provided for
herein.
"Third Operating Year" shall mean the calendar year which follows the end of the
Second Operating Year.
Lease.
Lease.
"Total Taking" shall have the meaning ascribed to that term in Section 1102 of this
"Transfer" shall have the meaning ascribed to that term in Section 802(a) of this Lease.
"Transferee" shall have the meaning ascribed to that term in Section 802(a) of this
B. [§ 102] Purpose of the Lease; Amendment of Hilton Parcel Lease and
Termination of Parcel C Lease.
The purpose of this Lease is to effectuate the Redevelopment Plan for the Merged
Huntington Beach Redevelopment Project by providing for the lease of the Site from Agency to
Lessee, the construction by Lessee of the Hotel Addition, and the operation on the Site of the
Expanded Hotel. The lease of the Site, development of the Hotel Addition, and operation of the
Expanded Hotel on the Site pursuant to this Lease, and the fulfillment generally of this Lease, are
in the vital and best interests of the City and the health, safety, morals, and welfare of its
residents, and in accord with the public purposes and provisions of applicable federal, state and
local laws and requirements.
This Lease supersedes and replaces the Hilton Parcel Lease from and after the Agreement
Date. As of the Agreement Date, the Parcel C Lease (including without limitation the form of
parking easement agreement attached thereto as Exhibit C), the Parking Easements, and the Fire
Lane Easement Agreement are terminated and shall be of no further force or effect.
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C. [§ 103] The Redevelopment Plan
This Lease is made in accordance with and is subject to the Redevelopment Plan for the
Merged Huntington Beach Redevelopment Project which was approved by the City Council of
the City of Huntington Beach through its adoption of Ordinance No. 3343 on December 16,
1996, as lawfully amended prior to the Agreement Date (collectively, the "Redevelopment
Plan"). The Merged Huntington Beach Redevelopment Project area is located in the City of
Huntington Beach, California. The exact boundaries of such Redevelopment Project Area are
specifically and legally described in the Redevelopment Plan for the Merged Huntington Beach
Redevelopment Project.
Any amendments hereafter to the Redevelopment Plan (as so approved and amended)
which change the uses or development permitted on the Site as provided in this Lease, or
otherwise change the restrictions or controls that apply to the Site or affect or impair any of the
rights or obligations of Lessee or the holder or beneficiary of any Mortgage obtained in
accordance with Section 901 of this Lease (the "Mortgagee"), shall not apply to Lessee or the
Site without the prior written consent of Lessee and the Mortgagee, which consent Lessee and
the Mortgagee may withhold in its or their sole and absolute discretion. No other amendments to
the Redevelopment Plan shall require the consent of Lessee or the Mortgagee.
D. [§ 104] Condition of the Site
(a) All portions of the Site, and any improvements thereon, which are leased to
Lessee by Agency shall be leased in an "as is" condition, with no warranty, express or implied,
by Agency as to the condition of the soil, its geology, the presence of known or unknown faults,
or the presence of any Hazardous Substances, and it shall be the sole responsibility of Lessee, at
Lessee's expense, to investigate and determine the soil conditions of the Site and the suitability
of the Site for the development to be constructed by Lessee. If the soil conditions of the Site, or
any part thereof, are not in all respects entirely suitable for the use or uses to which the Site will
be put, then it is the sole responsibility and obligation of Lessee to take such action as may be
necessary to place the Site and the soil conditions thereof in all respects in a condition entirely
suitable for the development of the Site, which may include demolition, clearing, or moving
buildings, structures, or other improvements, and removal of Hazardous Substances, as defined
in Section 104.1 below.
(b) Lessee hereby releases Agency and City and their respective officers, employees,
and consultants from any and all claims, liabilities, losses, damages, judgments, costs, or
expenses arising from or connected to any and all matters or states of fact affecting the Site
concerning or related to the physical condition of the Site.
[§ 104.1] Hazardous Substances
(a) "Hazardous Substance," as used in this Lease means any substance, material, or
waste which is or becomes regulated by the United States government, the State of California, or
any local or other governmental authority, including, without limitation, any material, substance,
or waste which is (i) defined as a "hazardous waste," "acutely hazardous waste," "restricted
hazardous waste," or "extremely hazardous waste" under Sections 25115, 25117 or 25122.7, or
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listed pursuant to Section 25140 of the California Health and Safety Code; (ii) defined as a
"hazardous substance" under Section 25316 of the California Health and Safety Code; (iii)
defined as a "hazardous material," "hazardous substance," or "hazardous waste" under Section
25501 of the California Health and Safety Code; (iv) defined as a "hazardous substance" under
Section 25281 of the California Health and Safety Code; (v) petroleum; (vi) asbestos; (vii) a
polychlorinated biphenyl; (viii) listed under Article 9 or defined as "hazardous" or "extremely
hazardous" pursuant to Article I 1 of Title 22 of the California Code of Regulations, Chapter 20;
(ix) designated as a "hazardous substance" pursuant to Section 311 of the Clean Water Act (33
U.S.C. Section 1317); (x) defined as a "hazardous waste" pursuant to Section 1004 of the
Resource Conservation and Recovery Act (42 U.S.C. Section 6903); ( xi) defined as a
"hazardous substance" pursuant to Section 101 of the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. Section 9601); or (xii) any other substance, whether
in the form of a solid, liquid, gas, or any other form whatsoever, which by any governmental
requirements either requires special handling in its use, transportation, generation, collection,
storage, treatment or disposal, or is defined as "hazardous" or is harmful to the environment or
capable of posing a risk of injury to public health and safety.
(b) For good and valuable consideration pursuant to the Lease, Lessee covenants each
and all of the following:
(1) Lessee shall remove all Hazardous Substances from the Site in the manner
prescribed by law.
(2) The Site shall be free and clear of any Hazardous Substances to the extent
required by applicable law.
(3) The development, construction, and uses of the Site permitted under this
Lease do not require the presence of any Hazardous Substance on the Site, except for those
customarily used in the ordinary course of business for such development, construction, and use.
(c) If at any time during the term of this Lease, any Hazardous Substance is present
on, in or under the Site (including, without limitation, the soil and groundwater) in violation of
applicable law, Lessee shall at no expense to Agency, at the earliest practicable date, remove
such Hazardous Substances from the Site (including without limitation any Hazardous
Substances in the soil or groundwater) and any surrounding areas to which such Hazardous
Substances may have migrated in accordance with and to the extent required by any and all
applicable legal requirements. The Parties intend to require. Lessee to remove all Hazardous
Substances from the Site and surrounding areas to which such Hazardous Substances may have
migrated to the extent required by applicable law, if such Hazardous Substances are present at
levels of concentration which require removal under applicable law. If, at any time during the
Term of this Lease, Agency has reasonable cause to believe one or more Hazardous Substances
may be present on, in or under the Site in violation of applicable law, Agency may by written
notice inform Lessee of the basis for Agency's concern and require Lessee to cause the Site to be
tested for such Hazardous Substance(s) at Lessee's sole expense in accordance with a testing
plan and schedule first approved in writing by Agency. Lessee shall exercise reasonable
diligence to submit a testing plan to Agency within 30 days after the date of the Agency's notice,
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endeavor to obtain Agency's approval of the testing plan as soon as practicable thereafter, and
cause the testing to begin within 30 days Agency's approval of the testing plan.
(d) Lessee shall not bring or allow to be brought onto the Site or use or store on the
Site any Hazardous Substances without the prior express written consent of the Agency, except
for those Hazardous Substances (including without limitation fuel stored in motor vehicles)
customarily used in the ordinary course of business in the use and operation of the Site and the
Improvements.
(e) The following covenants pertain to Lessee's occupancy and use of the Site and
Improvements except for those Hazardous Substances customarily used in the ordinary course of
business:
1. No underground storage tanks for Hazardous Substances shall be installed
without the prior written approval of the Agency's Executive Director.
2. Agency, or its officers, employees, contractors or agents shall at all times
have the right to go upon and inspect the Site and Improvements and the operations conducted
thereon to assure compliance with the requirements herein stated. Agency shall provide
reasonable prior notice to Lessee of such entry, and shall seek to minimize interference with
Lessee's use of the Site and Improvements as much as is reasonably feasible. Such entry shall be
in compliance with all applicable safety rules and regulations. This inspection may include
taking samples for testing of substances and materials present and/or testing soils on the Site and
Improvements. Agency shall indemnify, defend, and hold harmless Lessee from and against any
claims, liabilities, losses, and damage caused by Agency during any such inspections, and shall
be responsible for the prompt repair and/or restoration of any such damage caused by Agency
during any such inspection.
3. Lessee shall be responsible for posting on the Site and Improvements any
signs required by Section 25249.6 of the California Health and Safety Code and regulations
promulgated pursuant thereto. Lessee shall also complete and file any business response plans or
inventories required by Chapter 6.95. of the California Health and Safety Code and regulations
promulgated pursuant thereto. Lessee shall concurrently file a copy of any such business
response plan or inventory with Agency.
4. Lessee shall immediately notify Agency in writing of the release of any
Hazardous Substance on the Site and Improvements in violation of applicable law.
5. Lessee shall to the extent required by applicable law immediately remove
any Hazardous Substances located on the Site and Improvements and shall dispose of such
Hazardous Substances in a safe and legal manner. Lessee shall immediately disclose to Agency
its disposal of any Hazardous Substance located on the Site and Improvements and upon
Agency's written request shall provide written documentation of its safe and legal disposal.
(f) Lessee shall be responsible for and bear the entire cost of removal and disposal of
Hazardous Substances. Agency may also pass through to Lessee any and all clean-up costs
incurred by Agency as a result of Lessee's activities on the Site and Improvements or the
presence of any Hazardous Substance(s) on, in or under the Site and Improvements. Upon
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termination of this Lease, Lessee is required, in accordance with all applicable laws, to remove
from the Site and Improvements any equipment or improvement to the property that is
contaminated by Hazardous Substances.
(g) By this Lease, Lessee provides to the Agency, effective upon the date of this
Lease, an indemnification of the Agency and the City and their respective members, officers,
employees, agents, contractors and consultants relating to the environmental condition of the Site
and the presence of Hazardous Substances thereon. Therefore, Lessee hereby agrees to
indemnify, defend and hold harmless Agency and City and their respective members, officers,
agents, employees, contractors and consultants from any claims, actions, suits, legal and
administrative proceedings, liability, injury, deficiency, damages, fines, penalties, punitive
damages, costs, and expenses (including, without limitation, the cost of any cleanup,
remediation, removal, mitigation, monitoring or testing of Hazardous Substances, and reasonable
attorneys' fees) resulting from, arising out of, or based upon ( i) the presence, release, use,
generation, discharge, storage, or disposal of any Hazardous Substances on, under, in, or about,
or the transportation of any Hazardous Substances to or from, the Site; or (ii) the violation, or
alleged violation, of any statute, ordinance, order, rule, regulation, permit, judgment, or license
relating to the use, generation, release, discharge, storage, disposal, or transportation of
Hazardous Substances on, under, in, about, to, or from the Site.
(h) From the date of this Lease, Lessee hereby waives, releases and discharges the
Agency, the City, and their respective members, officers, employees, agents, contractors and
consultants, from any and all present and future claims, demands, suits, legal and administrative
proceedings, and from all liability for damages, losses, costs, liabilities, fees and expenses
(including, without limitation, attorneys' fees) arising out of or in any way connected with the
Agency's or Lessee's use, maintenance, ownership, or operation of the Site, any Hazardous
Substances on the Site, or the existence of Hazardous Substances contamination in any state on
the Site, however the Hazardous Substances came to be placed there, except that arising out of
the intentional misconduct of the Agency or its employees, officers or agents. Lessee
acknowledges that it is aware of and familiar with the provisions of Section 1542 of the
California Civil Code which provides as follows:
"A general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor."
As such relates to Section 104 and this Section 104.1, Lessee hereby waives and
relinquishes all rights and benefits which it may have under Section 1542 of the California Civil
Code.
II. [§ 200] LEASE OF THE SITE
A. [§ 201] Lease
For and in consideration of the rents, conditions, covenants, and agreements set forth
herein, Agency hereby leases and demises the Site to Lessee and Lessee does hereby take and
lease the Site from Agency.
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B. [§ 202] Term of the Lease
(a) The term of this Lease (the "Term") shall be ninety-nine (99) years, commencing
on the Agreement Date first written above and terminating on the ninety-ninth (99th) anniversary
of the Agreement Date, unless sooner terminated as provided for herein.
(b) At the expiration of the Term or upon the earlier termination of this Lease, Lessee
shall execute, acknowledge, and deliver to Agency, within thirty (30) days after written demand
by Agency, a valid and recordable quitclaim deed covering the Site and the Improvements, free
and clear of all liens and encumbrances.
III. [§ 300] RENT
A. [§ 301]
Construction Period Rent
(1) For the Construction Period, Lessee shall pay to Agency as Construction
Period Rent the annual amount of [insert $25,000 multiplied by the Adjustment Factor, and
round to the nearest $101.
(2) The Construction Period Rent specified in paragraph (1) above shall be
payable by Lessee to Agency in installments on the first (1st) day of each calendar month of the
Construction Period. The amount of each such monthly payment shall be one -twelfth (1/12) of
the annual amount, except that payment for any partial calendar month during the Construction
Period shall be the monthly payment multiplied by a fraction, the numerator of which is the
number of days in the Construction Period during such partial calendar month and the
denominator of which is the number of days in such calendar month.
B. [§ 302] Base Rent
(1) For the First Operating Year, Lessee shall pay to Agency as Base Rent the
amount of [insert $25,000 multiplied by the Adjustment Factor, and round to the nearest
$101 multiplied by a fraction, the numerator of which is the number of days in the First
Operating Year and the denominator of which is three hundred sixty-five (365).
(2) For the Second Operating Year, Lessee shall pay to Agency as Base Rent
the amount of [insert $75,000 multiplied by the Adjustment Factor, and round to the nearest
$10].
(3) For the Third Operating Year, Lessee shall pay to Agency as Base Rent
the amount of [insert $150,000 multiplied by the Adjustment Factor, and round to the
nearest $101.
(4) For each Operating Year beginning with the Fourth Operating Year,
Lessee shall pay to Agency as Base Rent the amount of [insert $150,000 multiplied by the
Adjustment Factor, and round to the nearest $10] as increased on the first day of each such
Operating Year (i.e., each Operating Year after the Third Operating Year) in proportion to the
escalation, if any, of the Consumer Price Index between the fifteenth (15th) month and the third
(3rd) month prior to the first day of such Operating Year, provided, however, that such escalation
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shall not in any single year exceed five percent (5%) of the preceding Operating Year's Base
Rent and shall not over any period of five consecutive Operating Year's exceed twenty percent
(20%) of the Base Rent at the commencement of such five Operating Year period; and provided,
further, that for the Last Partial Operating Year, such amount shall be multiplied by a fraction,
the numerator of which is the number of days in the Last Partial Operating Year and the
denominator of which is three hundred sixty-five (365).
(5) The Base Rent specified in paragraphs (1) through (4) above shall be
payable by Lessee to Agency in installments on the first (1st) day of each calendar month of each
Operating Year. The amount of each such monthly payment shall be one -twelfth (1/12) of the
Base Rent for the then current Operating Year, except as provided hereafter with respect to the
Last Partial Operating Year. Each monthly payment of Base Rent in the Last Partial Operating
Year shall be the Base Rent for the Last Partial Operating Year multiplied by a fraction, the
numerator of which is one and the denominator of which is the number of first days of calendar
months in the Last Partial Operating Year.
C. [§ 303] Participation Rent
(1) For each Operating Year beginning with the first day of the Third
Operating Year, Lessee shall pay to Agency as Participation Rent an amount equal to three
percent (3%) of Adjusted Room Revenue, which shall be payable as specified in paragraph (3)
below.
(2) Within one hundred eighty (180) days after the close of each Operating
Year (except the First Operating Year and the Second Operating Year), Lessee shall submit to
Agency, for Agency's review and written approval, a statement (the "Certified Annual
Statement") containing an itemization and a reasonable explanation of the composition of Gross
Room Revenue and Adjusted Room Revenue for the applicable Operating Year, togcther with a
certificate of an independent certified public accountant with a national accounting firm or
otherwise reasonably acceptable to Agency (the "Accountant"). The Accountant's certificate
shall be addressed to Agency, and shall state that the Accountant is familiar with the definition of
each of the defined terms used in Sections 301-303 of this Lease and attest to the accuracy of
Gross Room Revenue and Adjusted Room Revenue. At Lessee's election, the Accountant may
be any of the following national accounting firms:
i) Deloitte;
ii) Ernst & Young, LLP;
iii) KPMG;
iv) Price Waterhouse Coopers; or
v) Any national accounting firm having at the time of delivery of the
Certified Annual Statement reputation and stature in the accounting community comparable to
the foregoing firms as of the Agreement Date, if first approved by Agency.
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(3) No later than concurrently with Lessee's submission to Agency of the
Certified Annual Statement, and in any event within one hundred twenty (120) days after the end
of the applicable Operating Year, Lessee shall pay to Agency the amount of Participation Rent as
determined on the basis of such Certified Annual Statement. If Participation Rent is not paid
within thirty (30) days after the Certified Annual Statement is submitted to Agency or one
hundred twenty (120) days after the termination of the applicable Operating Year, whichever
first occurs, the amount of Participation Rent shall bear interest at the annual rate of three percent
(3%) over the prime rate of the largest bank operating in the State of California until paid. In this
regard, Lessee may pay the estimated amount of Participation Rent that is due based on internal,
non -audited records, within one hundred twenty (120) days after the end of the applicable
Operating Year, in which case an adjustment shall be made (either an additional payment by
Lessee or a credit by Agency against Lessee's next Rent payment owing) at the time the
Certified Annual Statement is later submitted within one hundred eighty (180) days after the end
of that Operating Year.
D. [§ 304] Triple Net Lease
This is an absolute net lease and Agency shall not be required to provide any services or
do any act or thing with respect to the Site and Improvements or the appurtenances thereto,
except as may be specifically and expressly provided herein, and Lessee shall make all payments
required by this Lease, including but not limited to the payment of rent to Agency, without any
claim on the part of Lessee for diminution, set-off or abatement, and nothing shall suspend, abate
or reduce any rent to be paid hereunder, except as otherwise specifically provided in this Lease.
E. [§ 305] Non -Subordination of Rent or Other Sums
Lessee hereby covenants and agrees that rent and all other sums of whatever kind and
nature payable to Agency from Lessee under the provisions of this Lease shall be paid from
Gross Revenue and, to the extent consistent with applicable law, all other expenses shall be
subordinate to the payments to Agency as required under this Lease. It is expressly understood
and agreed that there shall be no subordination or encumbrance of any kind under this Lease or
otherwise of (i) Agency's fee title ownership of the Site; (ii) Agency's interest in this Lease; and
(iii) Agency's right to receive Ground Rent under this Lease.
F. [§ 3061 Delinquency In Rental Payment; Collection of Rents
The failure of Lessee to pay Ground Rent by the due date shall constitute a default. In
the event Lessee fails to pay the applicable rents on or before the due date, in addition to any
other remedy provided by this Lease, Lessee shall pay Agency the delinquent rent and interest on
the total delinquent rent at the rate of three percent (3%) over the prime rate of the largest bank
operating in the State of California on the due date, from the date of each delinquency. Said
interest shall accrue from the due date of the rent to the date the rent is received by Agency. It is
the intent of this provision that Agency shall be compensated by such additional sums for loss
resulting from rental delinquency including costs to Agency for servicing the delinquent account.
Agency, at its option, may waive any such delinquency compensation required herein, upon
written application of Lessee.
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G. [§ 307] Right to Inspection and Audit of Records
Lessee shall keep full and accurate books and accounts, records, cash receipts, and other
pertinent data showing its financial operations. Such books of account, records, cash receipts,
and other pertinent data shall be kept for a period of five (5) years after the end of the Lease Year
to which such items pertain. Agency shall be entitled during such five (5) years to inspect,
examine and to copy at Agency's expense Lessee's books of account, records, cash receipts, and
other pertinent data as necessary or appropriate for the purpose of this Lease. Lessee shall
cooperate fully with Agency in making the inspection. Books and records shall remain
confidential and not public except as necessary to protect Agency's interests under this Lease.
Agency shall also be entitled at Agency's expense, once during each calendar year and
once after expiration or termination of this Lease, to an independent audit of Lessee's books of
account, records, cash receipts, and other pertinent data, by a certified public accountant to be
designated by Agency, as necessary or appropriate to the purposes and provisions of this Lease.
Any such audit shall be conducted after reasonable prior written notice by Agency to Lessee and
during Lessee's usual business hours. If the audit shows that there is a deficiency in the payment
of Ground Rent, the deficiency and interest thereon at the rate specified in Section 306 of this
Lease shall become immediately due and payable to Agency. If such deficiency exceeds the
amount of the greater of Five Thousand Dollars ($5,000.00), or two percent (2%) of the actual
Ground Rent due in any Lease Year in which there is a deficiency, Lessee shall reimburse
Agency for the cost of Agency's audit. If Agency has not audited Lessee hereunder with respect
to a particular Lease Year within the permitted five year period, or has not advised Lessee in
writing of any exceptions based on said audit within said five year period, then Agency shall be
deemed to have waived its right to redetermine Ground Rent for such Lease Year.
IV. [§ 4001 DEVELOPMENT OF HOTEL ADDITION ON THE SITE
A. [§ 401] Development to Be in Accordance With Approved Permits, Plans,
Drawings, and Specifications; Schedule of Performance
Subject to Lessee's vested rights set forth in the Development Agreement, Lessee shall
construct the Hotel Addition upon the Site in accordance with all permits, plans, drawings, and
specifications approved by City. Subject to any extensions of time permitted in accordance with
Section 1314 of this Lease, Lessee shall commence construction of the Improvements for the
Hotel Addition within sixty (60) days after the Agreement Date, Lessee shall diligently pursue
the construction of the Hotel Addition to completion, and Lessee shall complete construction of
the Hotel Addition within twenty-four (24) months after the Agreement Date.
B. [§ 4021 No Construction Before Notice
From and after issuance of the Release of Construction Covenants by the Agency
pursuant to Section 410 of this Lease, no work of any kind shall be commenced on the Site and
no building or other materials shall be delivered to the Site for construction of any
improvements, nor shall any other building or land development work be commenced on or
building materials be delivered to the Site at any time during the Term of this Lease, which work
and/or materials exceed in the aggregate Five Hundred Thousand Dollars ($500,000) escalated
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from the Agreement Date in accordance with the Consumer Price Index, until at least ten (10)
days following notice by Lessee to Agency of the intended commencement of such work or the
delivery of such materials.
C. [§ 403] Notice of Non -Responsibility
Agency shall, at any and all times during the Term of this Lease, have the right to post
and maintain on the Site and to record as required by law any notice or notices of non -
responsibility provided for by the mechanics' lien laws of the State of California. The work for
which said ten (10) days written notice is required shall include, in addition to actual
construction work, any site preparation work, installation of utilities, street construction or
improvement, or any grading or filling of the Site.
D. [§ 404] Mechanic's Materialman's, Contractor's or Subcontractor's Liens
Subject to Lessee's right to contest as hereinafter provided, at all times during the Term
of this Lease, Lessee shall keep the Site, including all buildings and improvements now or
hereafter located on the Site, free and clear of all liens and claims of liens for labor, services,
materials, supplies, or equipment performed on or furnished to the Site. Lessee shall promptly
(i) pay and discharge, or cause the Site to be released from, any such lien or claim of lien, or (ii)
contest such lien and furnish Agency such bond as may be required by law to free the Site from
the effect of such lien and to secure Agency against payment of such lien and against any and all
loss or damage whatsoever in any way arising from Lessee's failure to pay or discharge such
lien. In the event Lessee provides a bond in lieu of paying or discharging a lien as set forth
herein, and Agency is unable despite reasonably diligent effort to obtain an endorsement to any
existing title policy in favor of Agency insuring Agency's interest in the Site free and clear of
any such liens that have not been paid or discharged, Lessee shall, at Lessee's sole cost and
expense, within thirty (30) days of Agency's written request therefor, provide Agency with such
endorsement.
Should Lessee fail to pay and discharge, or cause the Site to be released from, any such
lien or claim of lien or to provide a bond as permitted hereunder within thirty (30) days after
service on Lessee by Agency of a written request to do so, Agency may pay, adjust, compromise,
and discharge any such lien or claim of lien on such terms and in such manner as Agency may
reasonably deem appropriate. In such event, Lessee shall, on or before the first day of the next
calendar month following any such payment by Agency, reimburse Agency for the full amount
so paid by Agency, including any actual and reasonable attorneys' fees or other costs expended
by Agency, together with interest thereon at the annual rate of interest equal to three percent
(3%) over the prime rate of the largest bank operating in the State of California as of the close of
business on the date of payment by the Agency, or the highest lawful rate, whichever is less,
from the date of payment by Agency to the date of Lessee's reimbursement of Agency.
On substantial completion of any work of improvement during the Term of this Lease,
Lessee shall record or cause to be recorded in the Official Records of Orange County a notice of
completion. Lessee hereby appoints Agency as Lessee's attorney -in -fact to record the notice of
completion, which appointment shall only become effective on ten (10) days' notice upon
Lessee's failure to record such a notice of completion after the work of improvement has been
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substantially completed; provided, that Agency shall not be obligated to record such a notice of
completion and the failure of Agency to record said notice shall not excuse the failure of Lessee
to discharge its obligation to record said notice of completion.
E. [§ 405] Rights of Access
Representatives of Agency and City shall have the reasonable right of access to the Site
without charges or fees, at normal construction hours during the period of construction for the
purposes of this Lease, including, but not limited to, inspection of the work being performed in
constructing the Improvements. Such representatives of Agency or City shall be those who are
so identified in writing by the Executive Director of Agency. The Agency shall provide
reasonable prior notice to Lessee of such entry, and shall seek to minimize interference with
Lessee's use of the Site and Improvements as much as is reasonably feasible. Such entry shall be
in compliance with all applicable safety rules and regulations. Agency shall indemnify, defend,
and hold harmless Lessee from and against any claim, liability, losses, and damages caused by
Agency during any such inspections, and shall be responsible for the prompt repair and/or
restoration of any such damage caused by Agency during any such inspection.
F. [§ 406] Local, State and Federal Laws
Lessee shall carry out the construction of the Improvements on the Site in conformity
with all applicable laws, including all applicable federal and state labor standards and
requirements.
G. [§ 407] Non-discrimination During Construction
Lessee for itself and its successors and assigns agrees that in the construction of the
Improvements on the Site provided for in this Lease, Lessee will not discriminate against any
employee or applicant for employment because of sex, marital status, race, color, creed, religion,
national origin, or ancestry.
H. [§ 409] Archaeological Provisions
Agency shall comply with any procedures or reviews relating to archaeological resources
and take any remedial action which may be required by applicable state and federal laws with
respect to development of the Site as contemplated by this Lease. In connection therewith,
Agency shall perform, at its expense, any necessary studies, tests or surveys which may be
required to comply with such procedures or reviews, or to undertake any required remedial
action for such clearances or certifications. Lessee shall comply with all reasonable requests
from Agency, including but not limited to requests for access to the Site, to facilitate Agency's
compliance with such procedures or reviews and obtainment of such clearances or certifications.
I. [§ 410] Release of Construction Covenants.
(a) Within twenty (20) Business Days after the later of (i) completion of construction
of the Hotel Addition and (ii) Agency's receipt of Lessee's written request therefor, Agency shall
furnish Lessee with an executed Release of Construction Covenants in substantially the form set
forth in Exhibit "F" attached hereto such that Lessee will be able to record such document in the
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Office of the County Recorder of Orange County. Agency shall not unreasonably withhold such
Release of Construction Covenants. Not by way of limitation of the foregoing, it is agreed that
the scope of Agency's jurisdiction in determining whether to issue its Release of Construction
Covenants shall be limited to the Hotel Addition and the portions of the Existing Hotel that are
physically demolished, altered, or improved in order to accommodate the Hotel Addition and not
to portions of the Existing Hotel that are not physically demolished, altered, or improved as part
of such scope of work. Such Release of Construction Covenants shall constitute evidence of
satisfactory completion of the construction required under this Lease and the Release of
Construction Covenants shall so state.
(b) If Agency refuses or fails to furnish a Release of Construction Covenants for the
Site after written request from Lessee, Agency shall, within twenty (20) Business Days of the
written request, provide Lessee with a written statement of the reasons Agency refused or failed
to furnish the Release of Construction Covenants for the Site. The statement shall also contain
Agency's opinion of the action Lessee must take to obtain a Release of Construction Covenants
for the Site, but it need not contain technical information or instructions. If the reason for such
refusal is confined to the immediate availability of specific items of landscaping or other minor
items or the failure to complete "punch list" items, Agency shall issue the Release of
Construction Covenants upon the posting of a bond or other security instrument in form and
content acceptable to Agency and in an amount representing the fair value of the work not yet
completed, which bond or other security instrument shall secure Lessee's obligation to complete
all outstanding items of construction and development within sixty (60) days following the
issuance of the Release of Construction Covenants.
Such Release of Construction Covenants shall not constitute evidence of compliance with
or satisfaction of any obligation of Lessee to any holder of a mortgage, or any insurer of a
mortgage securing money loaned to finance the improvements on the Site or any part thereof.
Such Release of Construction Covenants is not a notice of completion as referred to in Section
3093 of the California Civil Code.
V. [§ 500] USE OF THE SITE AND CITY BEACH PROPERTY
A. [§ 501 ] Use of the Site and Improvements
Lessee covenants and agrees for itself, its successors, its assigns, and every successor in
interest to the Site and Improvements or any portion thereof, that during construction of the
Hotel Addition and thereafter through the remainder of the Term of this Lease, Lessee, such
successors, and such assignees shall not use or suffer to be used the Site other than as a hotel
without Agency's prior written consent. Uses normally incidental to a hotel use, including
without limitation a restaurant, cocktail lounge, cleaning and laundry service, banquet and
catering facilities, meeting rooms, gift shop, spa, resort retail, magazine stand, barber or beauty
shop, travel agency, airline ticket office, automobile rental operation, and recreational facilities
shall also be permitted.
Not by way of limitation of the foregoing, the Hotel to be operated by Lessee on the Site
shall be operated as a "first-class hotel." As used herein, the term "first-class hotel" shall mean
that, subject to any limitations imposed by the physical structure and configuration of the
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Improvements as initially constructed or changed or altered as permitted herein, the
Improvements shall be maintained and the Hotel shall be operated in a manner at least
comparable to the standard of quality for full service hotels operated and maintained from time
to time by any of the following hotel companies: Hilton, Sheraton, Marriott, Hyatt, or any
subsidiaries thereof. The designation "first-class" is intended to reflect the highest standard of
hotel operation other than deluxe, luxury, or resort hotels. It is recognized that not all services
and facilities available in one first-class hotel will necessarily be provided by all first-class
hotels, but that the composite of service and facilities provided by each first-class hotel will
cause the same to be deemed to constitute a first-class hotel. Agency and/or Lessee may request
additions or deletions to such list, subject to the reasonable approval of the other Party; provided,
however, in no event shall there be fewer than four (4) hotel companies on such list at any one
time.
Subject to Lessee's rights under the Development Agreement referred to in Recital C of
this Lease, Lessee, at Lessee's expense, shall promptly comply with all valid and applicable
current and future laws, ordinances, orders, rules, regulations, and requirements of all
governmental authorities having jurisdiction of, or affecting or applicable to the Site or
Improvements or the cleanliness, safety, occupancy, and use of the same, whether or not any
such law, ordinance, order, rule, regulation, or requirement is substantial, or foreseen or
unforeseen, or ordinary or extraordinary or shall necessitate structural changes of the
Improvements or interfere with the use and enjoyment of the Site; provided, that nothing in this
Section 501 is intended to constitute a waiver by Lessee of its vested rights, if any, to maintain a
legal nonconforming use or its rights under the Development Agreement. If any governmental
license or permit shall be required for the proper and lawful conduct of Lessee's business or
other activities conducted on the Site, then Lessee, at its sole expense, shall duly procure and
thereafter maintain such license or permit, or cause such procurement and maintenance, and
submit the same for inspection by Agency. Agency shall cooperate with Lessee, at no cost to
Agency, as may reasonably be necessary in order to assist Lessee in complying with this
paragraph, including making appearances at hearings and executing documents.
At all times during the Term of this Lease, Lessee shall manage the Site and
Improvements or cause the Site and Improvements to be managed in a prudent and business -like
manner as necessary to maintain the Site and Improvements in a first-class condition.
Lessee shall assume responsibility, subject to the provisions of this Lease, for the
operation and maintenance (including repair, restoration, and reconstruction) of all of the
Improvements constructed on the Site and the costs thereof, and Agency and City shall have no
liability for costs of such operation and maintenance by Lessee or for any claims arising from the
operation and maintenance (including repair, restoration, and reconstruction) of such
Improvements. Without limiting the generality of the foregoing, Lessee, in the maintenance of
the Improvements, shall observe the following standards:
1. Maintain the surface of all automobile and pedestrian areas level, smooth, and
evenly covered with the type of surfacing materials originally installed thereon or such substitute
thereof as shall be in all respects equal thereto or better in quality, appearance and durability.
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2. Remove all papers, debris, filth, and refuse, and sweep, wash down, and/or clean
all hard surfaces, including brick, metal, concrete, glass, wood, and other permanent poles, walls,
or structural members, as required.
3. Maintain such appropriate entrance, exit, and directional signs, markers, and
lights as shall be reasonably required and in accordance with the practices prevailing in the
operation of similar developments.
4. Clean lighting fixtures and relamp and/or reballast as needed.
5. Repaint striping, markers, directional signs, etc., as necessary to maintain in first-
class condition.
6. Maintain landscaping as necessary to keep it in a first-class, thriving condition.
7. Maintain signs, including relamping and/or reballasting and/or repairing, as
required.
8. Provide security personnel and security measures to the extent reasonably
necessary. Lessee shall seek the advice of the police department in planning appropriate security
measures.
9. Maintain and keep in good condition and repair all be niches, shelters, planters,
mall coverings, banners, kiosks, and other furniture, trash containers, sculptures, play areas,
platforms, and stages.
10. Maintain and keep in a sanitary condition public restrooms and other common use
facilities.
11. Clean, repair and maintain all common utility systems to the extent that the same
are not cleaned, repaired, and maintained by public utilities.
12. Maintain all fountains and associated structures, drinking fountains, pumps, and
associated plumbing.
13. Maintain all lights, light fixtures and associated wiring systems.
14. Maintain public right-of-way items between the property and the street, including
sidewalks, curbs, gutters, driveways, signs and poles, curb painting and markings.
15. Maintain all surface and storm lateral drainage systems.
16. Maintain all sanitary sewer lateral connections.
In addition, Lessee shall not commit or suffer to be committed any waste upon the Site or
any nuisance or other act or thing which disturbs the quiet enjoyment of owners or occupants of
property adjacent to the Site; provided, however, that as long as the Improvements as constructed
and maintained are in full compliance with all permits and other requirements of law, no claim of
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breach of this paragraph may be made by Lessor based on a claim of nuisance. In addition,
Lessee shall not remove any of the Improvements from the Site, nor waste, destroy, or modify
any Improvements on the Site, except as permitted by this Lease.
As an additional obligation under this Lease, Lessee shall perform all of its obligations
under the License Agreement referred to in Recital F of this Lease in the public rights -of -way
immediately adjacent to the Site.
B. [§ 502] Management Agreement and Franchise Agreement
Prior to the Agreement Date of this Lease, Lessee has entered into a hotel management
agreement for the Existing Hotel on Parcel A with Mayer Hospitality Group LLC, a California
limited liability company, and a hotel franchise or license agreement for the Existing Hotel on
the Hilton Parcel with Hilton Franchise, LLC, a Delaware limited liability company, both in
accordance with the Hilton Parcel Lease, and Agency has approved said hotel management
agreement and hotel franchise/license agreement and the identities of the Hotel manager and
Hotel franchisor/licensor. Agency additionally approves Mayer Hospitality Group LLC as the
management company for the Expanded Hotel to be constructed and operated on the Site
pursuant to this Lease and Agency approves Hilton Franchise, LLC, as the franchisor/licensor for
the Expanded Hotel as well.
Prior to entering into a Hotel management agreement or a Hotel franchise or license
agreement with any entity other than Waterfront Resorts, LLC, or affiliated entity (as to the
management agreement), or Hilton Franchise, LLC, or affiliated entity (as to the
franchise/license agreement), Lessee shall first submit said agreement to Agency for approval, it
being understood and agreed that Lessee may redact from such agreement when submitted to
Agency for approval economic terms and any other confidential business information not
relevant to the purposes of Agency's review and approval. Agency's role in reviewing and
approving such agreement(s) shall be limited to determining their consistency with the
provisions of this Lease. Any new Hotel manager shall be required to have not less than eight
(8) years of experience in the successful operation of first quality hotels comparable to the
Existing Hotel constructed on Parcel A, or as otherwise approved by Agency. Any new Hotel
franchisor or licensor shall meet the criteria set forth in Section 501 of this Lease for hotel
companies that franchise or license "first-class" hotels.
Approvals required of Agency under this Section 502 shall follow and be limited by the
following procedures:
Within twenty (20) Business Days after receipt of Lessee's request for approval, Agency
shall respond in writing by stating what further information, if any, Agency reasonably requires
in order to determine whether or not to approve the management or franchise agreement. Lessee
shall promptly furnish to Agency such further information as may be reasonably requested.
Lessee's request for approval shall be deemed complete twenty (20) Business Days after
Agency's receipt thereof, if no timely response requesting further information is delivered to
Lessee, or, if such a timely response requesting further information is received, on the date that
Lessee delivers such additional information to Agency, provided that Lessee's additional
information is responsive to Agency's request. Agency shall approve or disapprove the matter
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within thirty (30) Business Days after Lessee's request for such approval is accepted as complete
or is deemed complete. Approval shall not be unreasonably withheld if Lessee demonstrates that
(i) the proposed management agreement will provide capable, competent, and experienced
operation of first-class hotels similar in quality, size, and type as required to be maintained on the
Site and Improvements pursuant to this Lease or (ii) the proposed franchise agreement is with a
franchisor listed in Section 501 (or comparable hotel company) and otherwise meets the
standards set forth in Section 501 of this Lease. If Agency shall disapprove a proposed Hotel
operator or franchisor, Agency shall do so by written notice to Lessee stating the reasons for
such disapproval.
C. [§ 503] Obligation to Refrain from Discrimination
There shall be no discrimination against or segregation of any person, or group of
persons, on account of sex, marital status, race, color, creed, religion, national origin, or ancestry
in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the Site and
Improvements, and Lessee itself or any person claiming under or through it shall not establish or
permit any such practice or practices of discrimination or segregation with reference to the
selection, location, number, use, or occupancy of tenants, lessees, subtenants, sublessees, or
vendees of the Site and Improvements.
D. [§ 504] Form of Nondiscrimination and Nonsegregation Clauses
Lessee shall refrain from restricting the rental, sale, or lease of the Site and
Improvements, or any portion thereof, on the basis of sex, marital status, race, color, creed,
religion, ancestry, or national origin of any person. All such deeds, leases, or contracts
pertaining to the foregoing matters shall contain or be subject to substantially the following
nondiscrimination or nonsegregation clauses:
1. In deeds: "The grantee herein covenants by and for itself, its heirs,
executors, administrators and assigns, and all persons claiming under or
through it, that there shall be no discrimination against or segregation of,
any person or group of persons on account of sex, marital status, race,
color, creed, religion, national origin, or ancestry in the sale, lease,
sublease, transfer, use, occupancy, tenure, or enjoyment of the land herein
conveyed, nor shall the grantee itself or any person claiming under or
through it, establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location,
number, use, or occupancy of tenants, lessees, subtenants, sublessees, or
vendees in the land herein conveyed. The foregoing covenants shall run
with the land."
2. In leases: "The lessee covenants by and for itself, its heirs, executors,
administrators and assigns, and all persons claiming under or through it,
and this lease is made and accepted upon and subject to the following
conditions:
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That there shall be no discrimination against or segregation of any person
or group of persons on account of sex, marital status, race, color, creed,
religion, national origin, or ancestry, in the leasing, subleasing,
transferring, use, or enjoyment of the land herein leased nor shall the
lessee itself, or any person claiming under or through it, establish or
permit any such practice or practices of discrimination or segregation with
reference to the selection, location, number, use, or occupancy of tenants,
lessees, sublessees, subtenants, or vendees in the land herein leased."
3. In contracts: "There shall be no discrimination against or segregation of,
any person or group of persons on account of sex, marital status, race,
color, creed, religion, national origin, or ancestry in the sale, lease,
sublease, transfer, use, occupancy, tenure, or enjoyment of the land, nor
shall the transferee itself or any person claiming under or through it,
establish or permit any such practice or practices of discrimination or
segregation with reference to the selection, location, number, use, or
occupancy of tenants, lessees, sublessees, subtenants, or vendees in the
land."
E. [§ 505] Quiet Enjoyment
The Parties hereto mutually covenant and agree that Lessee, by keeping and performing
the covenants herein contained, shall at all times during the Term of this Lease, peaceably and
quietly have, hold, and enjoy the Site and Improvements.
F. [§ 506] Restriction on Use of City Beach Property
(a) Recitals.
1. City is one of the owners in fee of that certain real property located in the
City of Huntington Beach, California, and bounded on the north by the right-of-way line for
Pacific Coast Highway, on the east by Huntington Beach State Park, on the south by the mean
high tide line of the Pacific Ocean, and on the west by an imaginary line extending southward
from the westerly side of the intersection of Pacific Coast Highway and Huntington Street
(hereinafter referred to as the "City Beach Property"). The City Beach Property is more
particularly described in Exhibit "C" attached hereto and incorporated herein by this reference.
2. Lessee has constructed and will be constructing, operating, and
maintaining on the Site ocean -oriented, visitor -serving commercial facilities which are designed
to take full advantage of the of the existing ocean views across Pacific Coast Highway. Lessee
desires to obtain assurances from Lessor that such views will not be obstructed during the Term
of this Lease.
3. Pursuant to the California Coastal Act of 1976, as amended (Public
Resources Code Section 30000, et seq.), City has prepared and the California Coastal
Commission has certified a Local Coastal Plan (as amended, the "LCP") for that portion of the
City of Huntington Beach that is located within the Coastal Zone, including the City Beach
Property. On January 19, 1981, the City Council of City adopted Resolution No. 4954 adopting
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the LCP in the form of the Coastal Element of the City's General Plan. The LCP has
subsequently been amended through the City Council's adoption of Resolution No. 5147 on
August 2, 1982, Resolution No. 5267 on May 16, 1983, Resolution No. 5341 on January 3, 1984,
and Resolution No. on , 200—
The LCP is a public record, a copy of which
is available for inspection at the office of the City Clerk at the City of Huntington Beach, 2000
Main Street, Huntington Beach, California 92648.
4. The LCP requires "Preservation of as much beach sand area as possible in
order to accommodate future levels of beach attendance." (LCP, Section 2.3.) The LCP further
establishes as a policy the "increased numbers of hotel/motel rooms and restaurants in the
Coastal Zone." (Id., at section 3.3.) The LCP designates the entire City Beach Property for
recreational use in which the "principal permitted uses ... are limited to open sand areas, beach
related recreational activities, and under certain conditions, parking lots, concessions and
camping." (Id., at Figure 9.11 and section 9.2.5.) The LCP further "prohibit(s) development of
permanent above -ground structures on the beach sand area" on the City Beach Property with the
exception of lifeguard towers and other public safety facilities, public restrooms and beach
concession stands when located immediately adjacent to paved parking or access areas, fire
rings, volleyball nets, bike trails, bike support facilities, and handicapped access. Finally, the
LCP "prohibit(s) expansion of parking facilities that would result in the loss of recreational sand
area ..." (Id., at Section 9.5.1.)
5. On October 10, 1983, the City Council of City adopted Resolution No-
5308 a, b, and c, approving and adopting the Downtown Specific Plan (as amended, the
"Specific Plan") for the implementation of the LCP. The Specific Plan has subsequently been
amended through the City Council's adoption of Resolution No. on ,
200_, and Resolution No. _ on , 201_ [INSERT]. The entire City Beach
Property is located in District 7 (formerly District 11) of the Specific Plan, which is designated
for beach -related open space and recreational uses. District Eleven "is intended to preserve and
protect the sandy beach area within the (Downtown] Specific Plan boundaries while allowing
parking and auxiliary convenience uses." (Specific Plan, Section 4.13.) Pursuant to the Specific
Plan, the only uses and structures permitted on the City Beach Property are access facilities,
basketball courts, beach concession stands at intervals no closer than one thousand (1,000) feet
and limited to two thousand five hundred (2,500) square feet per building, bicycle and jogging
trails and support facilities, fire rings, lifeguard towers, and other structures necessary for health
or safety, paddleboard courts, surface parking lots, or public transit facilities that will not result
in the loss of recreational sand areas, provided that any tiered parking shall be designed so that
the top of the structures including walls, etc., are located a minimum of one foot below the
maximum height of the adjacent bluff, park offices, playground equipment, public restrooms,
public dressing rooms or showers, shoreline construction that may alter natural shoreline process
(such as groins, cliff retaining walls, pipelines, and outfalls that are designed to eliminate adverse
impacts on local shoreline sand supply), and volleyball net supports.
6. Lessor and Lessee desire to ensure the long-term maintenance of the City
Beach Property for beach -related uses consistent with the LCP and Specific Plan, to promote the
development and operation of high -quality visitor -serving commercial uses on the Site, and to
provide a long -terns source of revenue to City to enhance City's implementation of the LCP and
Specific Plan or for other public purposes as determined by City in its sole discretion.
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(b) Agency covenants not to construct or maintain or permit to be constructed or
maintained any improvements or structures on the City Beach Property excepting only the
following: access facilities, basketball courts, beach concession stands at intervals no closer than
one thousand (1,000) feet and limited to two thousand five hundred (2,500) square feet per
building, bicycle and jogging trails and support facilities, fire rings, lifeguard towers, and other
structures necessary for health or safety, paddleboard courts, parking lots and public transit
facilities that will not result in the loss of recreational sand area and that will not extend above
the existing grade of the -adjacent stretch of Pacific Coast Highway, park offices, playground
equipment, public restrooms, public dressing rooms or showers, shoreline construction that may
alter natural shoreline process (such as groins, cliff retaining walls, pipelines, and outfalls that
are designed to eliminate adverse impacts on local shoreline sand supply), volleyball net
supports, and pedestrian overcrossing(s) of Pacific Coast Highway.
(c) Agency covenants to cause the City to maintain and operate on the City Beach
Property beach parking that is accessible to the public and with substantially the same number of
available spaces that existed as of September 21, 1998 (the "Adoption Date" of the Development
Agreement).
(d) Agency covenants that the following uses shall not be allowed on the City Beach
Property without the prior written consent of Lessee:
1. Camping;
2. Overnight parking of recreational vehicles;
3. Sale, or exhibition for the purpose of sale, of cars, motorcycles, go-karts,
boats, personal watercraft, recreational vehicles or other similar equipment; or
4. Events and/or structures that would obstruct the view of the ocean from
the Hotel or any of the courtyards on the Site, or would materially alter the local beach
environment.
(e) Agency covenants that the following uses shall not be allowed on the City Beach
Property without the City or Agency first giving sixty (60) days prior written notice to Lessee of
its intent to process a permit to allow:
1. Events which generate noise, such as, but not limited to, racing or
operation of cars, motorcycles, go-karts, boats, personal watercraft, recreational vehicles or other
similar equipment, use of amplified music, or use of a public address systems (except when used
in conjunction with normal police or marine safety functions);
2. Sale of food or beverages, or rental or sale of any products or services,
other than those sales or rentals conducted on the premises of the beach concession stands within
the City Beach Property;
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3. Events, meetings, gatherings, competitions, tournaments, or contests
where the observation of same is not free and open to the general public or which does not
primarily involve entertainment, sports or recreational activities;
4. Events which in any way restrict the access to or use of any pedestrian
overcrossing(s) constructed over Pacific Coast Highway at the Site or that restrict direct access
through the parking lot to the beach from such pedestrian overcrossing(s);
5. Events which together with staging, storage, support services and
anticipated parking generated by such events, occupy more than 33% of the City Beach Property;
6. Events which occur in excess of five consecutive days in duration or in
excess of a total of thirty (30) days per year; or
7. Tents, balloons, flags, bleachers, seating, scaffolding or other temporary
structures which wholly or partially impede the view of the ocean or sand from the Hotel or any
of the courtyards on the Site.
(0 The City has established a procedure to approve all specific events on the beach.
Agency shall cause the City to provide adequate notice to Lessee and to permit Lessee to consult
with the City's Specific Events Committee not less than sixty (60) days prior to the Committee's
consideration of approval of a permit for potential uses or activities on the City Beach Property.
Lessee may appeal any permit approved by the Specific Events Committee to the City Council
by filing the appeal in writing within ten (10) days after the approval of the permit by the
Specific Events Committee. If a specific event permit is appealed, the Specific Events
Committee shall not issue the permit until such time as the City Council has acted on the appeal.
(g) In consideration of the Agency's agreement to restrict development on the City
Beach Property as set forth herein, Lessee shall pay to Agency the amounts set forth below
1. For each Lease Year from the Agreement Date of this Lease through 2013,
inclusive, or the earlier termination of this Lease (if applicable), the sum of One Thousand Six
Hundred Sixty -Six Dollars and Sixty -Six Cents ($1,666.66) per Lease Year, payable in advance
on the first day of each such year.
2. For each Lease Year commencing on or after January 1, 2014, through the
expiration or earlier termination of the Term of this Lease the sum of One Thousand Six
Hundred Sixty -Six Dollars and Sixty -Six Cents ($1,666.66) per year adjusted upward as of
January 1, 2014, and each January 1St thereafter as provided herein (the "Adjustment Dates"),
with such sum payable in advance on the first day of each such year. The annual adjustment
shall be calculated upon the basis of the Consumer Price Index. The Consumer Price Index
published and in effect ninety (90) days prior to the twenty-fifth (25"') anniversary of the
Agreement Date shall be considered the "Base Year Index." At each Adjustment Date, the
consideration otherwise due shall be adjusted by the percentage increase, if any, between the
Base Year Index and the Consumer Price Index published and in effect ninety (90) days
preceding the Adjustment Date. In no event shall the consideration payable on any Adjustment
Date be less than the consideration required to be paid during the year immediately preceding
such Adjustment Date notwithstanding the fact that the Consumer Price Index may, as of some
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Adjustment Date, be less than the Consumer Price Index as of the previous Adjustment Date or
the Base Year Index. When the amount of the adjusted consideration is determined, and at least
thirty (30) days prior to the date payment for the next year is due, Agency shall give Lessee
written notice of the amount of the adjusted consideration indicating how the new figure was
computed. If at any Adjustment Date the Consumer Price Index shall not exist in the same
format as recited herein, Agency and Lessee shall agree to substitute any official index published
by the Bureau of Labor Statistics or successor or similar governmental agency as may then be in
existence and which is most nearly equivalent to the Consumer Price Index. Should Agency and
Lessee be unable to mutually agree as to any such substitute index prior to the date such
agreement is required in order to properly and timely comply with this Section 507(c),
determination of the proper substitute index shall be determined by arbitration conducted in
accordance with the then -prevailing commercial arbitration rules of the American Arbitration
Association or its successor.
(h) The Parties desire to make the covenants set forth in this Section 507 enforceable
as equitable servitudes the burden of which will run with the land and bind successive owners of
the City Beach Property and benefit Lessee and assignees and sublessees of Lessee's interest in
the Site, all within the contemplation and for the purposes set forth in Section 1470 of the
California Civil Code. On or about , 1989, pursuant to Article VIII of the Hilton
Parcel Lease, City, Agency, and Waterfront Construction No. 1 executed that certain
Memorandum of Lease Containing a Restrictive Covenant that sets forth the restrictions
contained in this Section 507 for the benefit of the lessee under the Hilton Parcel Lease for the
term thereof and caused said instrument to be recorded on , 1989, as Instrument
No. in the Official Records of the Orange County Recorder's Office. Immediately
following the Agreement Date of this Lease, the Parties shall cooperate in causing the First
Amended Memorandum of Lease Containing a Restrictive Covenant in the form set forth in
Exhibit "D" to this Lease to be fully executed and recorded against the City Beach Property.
VI. [§ 6001 UTILITIES, TAXES, ASSESSMENTS, AND OTHER CHARGES
A. [§ 601] Utilities
Lessee agrees to pay or cause to be paid, as and when they become due and payable, all
charges for water, gas, light, heat, telephone, electricity, and other utility and communication
services rendered or used on or about the Site and Improvements at all times during the Term of
this Lease.
B. [§ 602] Impositions (Including Taxes and Assessments)
C. [§ 603] Payment Generally
Lessee agrees to pay or cause to be paid, as and when they become due and payable, and
before any fine, penalty, interest, or cost may be added thereto, or become due, or be imposed by
operation of law for the nonpayment thereof, all taxes, assessments, franchises, excises, license
and permit fees, and other governmental levies and charges, general and special, ordinary and
extraordinary, unforeseen and foreseen, of any kind and nature whatsoever which at any time
during the Term of this Lease may be assessed, levied, confirmed, imposed upon, or grow or
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become due and payable out of or in respect of, or become a lien on: (1) the Site and
Improvements or any part thereof or any appurtenance thereto; (2) the rent and income received
by Lessee from subtenants, guests, or others for the use or occupation of the Site and the
Improvements thereon; or (3) this transaction or any document to which Lessee is a party,
creating or transferring an interest or estate in the Site and Improvements. All such taxes,
franchises, excises, license and permit fees, and other governmental levies and charges shall
hereinafter be referred to as "Impositions." Any Imposition relating to a fiscal period of the
taxing authority, a part of which period is included within the Term of this Lease and a part of
which is included in a period of time after the expiration of the Term of this Lease, shall
(whether or not such Imposition shall be assessed, levied, confirmed, imposed upon, become a
lien upon the Site and Improvements, or shall become payable, during the Term of this Lease) be
adjusted between Agency and Lessee as of the expiration of the Term of this Lease, so that
Lessee shall pay that portion of such Imposition which that part of such fiscal period included in
the period of time before the expiration of the Term of this Lease bears to such fiscal period, and
Agency shall pay the remainder thereof; Lessee shall not be entitled to receive any
apportionment, if Lessee shall be in default in the performance of any of Lessee's covenants and
agreements as provided in this Lease.
The failure of Lessee to pay an Imposition that cannot under any circumstances give rise
to a lien against the Site and Improvements shall not be a breach of the first paragraph of this
Section 603. Lessee hereby agrees to defend, indemnify, and hold harmless Agency and City
and their respective officers, employees, and consultants from and against all claims, liability,
loss, damage, costs, or expenses (including reasonable attorney's fees and court costs) arising
from or as a result of Lessee's failure to pay any Imposition to the extent that such Imposition
relates to a fiscal period included within the Term of this Lease.
D. [§ 604] Payment of Impositions in Installments
If, by law, any Imposition may at the option of the payer be paid in installments (whether
or not interest shall accrue on the unpaid balance of such Imposition), Lessee may exercise the
option to pay the same (and any accrued interest on the unpaid balance of such Imposition) in
installments and, in such event, shall pay such installments as may become due during the Term
of this Lease as the same respectively become due and before any fine, penalty, further interest,
or cost may be added thereto; provided, however, that the amount of all installments of any such
Imposition which will be the responsibility of Lessee pursuant to Section 603 herein above, and
which are to become due and payable after the expiration of the Term of this Lease, shall be
deposited with Agency for such payment on the date which shall be one (1) year immediately
prior to the date of such expiration.
E. [§ 605] Agency Right to Cure
If Lessee, in violation of the provisions of this Lease, shall fail to pay and to discharge
any Imposition, Agency may (but shall not be obligated to) pay or discharge it, and the amount
paid by Agency and the amount of all costs, expenses, interest and penalties connected therewith,
including attorney fees, together with interest at the rate of three percent (3%) over the prime rate
of the largest bank operating in the State of California on the date payment is made by Agency,
shall be deemed to be and shall be payable by Lessee as additional rent and shall be reimbursed
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to Agency by Lessee on demand, provided that Lessee and the holder of any Mortgage obtained
in accordance with Section 901 of this Lease that has registered its name and address in writing
with Agency shall have failed to pay such imposition within ten (10) business days after written
notice from Agency to Lessee and such holder of Agency's intention to pay.
F. [§ 606] Tax Receipts
Lessee shall furnish to Agency, within forty-five (45) days after the date when any real
property taxes, assessments or any other Imposition which could have any effect on Agency's
title would become delinquent, official receipts of the appropriate taxing authority or other
evidence, satisfactory to Agency evidencing payment thereof.
G. [§ 6071 Limits of Tax Liability
The provisions of this Lease shall not be deemed to require Lessee to pay municipal,
county, state, or federal income or gross receipts or excess profits taxes assessed against Agency,
or municipal, county, state or federal capital levy, estate, succession, inheritance, gift, or transfer
taxes of Agency, or corporation franchise taxes imposed upon any corporate owner of the fee of
the Site; except, however, that Lessee shall pay all taxes assessed by any governmental authority
by virtue of any operation by Lessee conducted on or out of the Site and Improvements. It is
agreed that in the event the State of California or any taxing authority thereunder changes or
modifies the system of taxing real estate so as to tax the rental income from real estate in lieu of
or in substitution (in whole or in part) for the real estate taxes and so as to impose a liability upon
Agency for the amount of such tax, then Lessee shall be liable under this Lease for the payment
of the taxes so imposed during the term of this Lease, or any renewal thereof, to the same extent
as though the alternative tax was a tax upon the value of the Site and Improvements. In order to
determine the amount of such alternative tax for which Lessee shall be liable, the Site and
Improvements shall be considered as if it was the only asset of Agency, and the rent paid
hereunder shall be considered as if it were the only income of Agency.
H. [§ 608] Contests
(a) After the reassessment of the Site by the Orange County Assessor's office after
Lessee's completion of construction of the Hotel Addition and Agency's issuance of its Release
of Construction Covenants therefor, Lessee shall refrain from taking any action to appeal,
challenge, or contest in any manner the validity or amount of any property tax assessment of the
Site and Improvements that results in the assessment being reduced to a value less than the sum
of (i) the assessed valuation of the Hilton Parcel in and for the last full fiscal year (July 1-June
30) ending prior to the Agreement Date and (ii) Thirty Million Dollars ($30,000,000).
(b) Subject to the restriction on Lessee's authority to contest, oppose, or object to
property tax assessments as set forth in Section 608(a) of this Lease, Lessee shall have the right
to contest, oppose, or object to the amount or validity of any Imposition; provided, however, that
any such permitted proceedings shall be begun without undue delay after any contested item is
imposed and shall be prosecuted to final adjudication with reasonable dispatch. Lessee shall
give Agency prompt notice in writing of any such contest at least ten (10) days before any
delinquency occurs. Lessee may only exercise its right to contest an Imposition hereunder if
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Lessee has met one of the following conditions: (i) Lessee has paid the Imposition under protest
prior to its becoming delinquent; or (ii) Lessee has obtained and maintained a stay of all
proceedings for enforcement and collection of the Imposition by posting a bond or other security
as may be required by law to obtain such a stay; or (iii) Lessee shall have delivered to Agency a
good and sufficient undertaking in a form reasonably satisfactory to Agency's Executive
Director, in an amount equal to one hundred twenty five percent (125%) of the amount in
controversy (inclusive of fines, interest, penalties, costs, and other expenses that may have
accrued or been imposed thereon) and issued by a surety company authorized to issue
undertakings in California, conditioned on the payment by Lessee of the Imposition together
with any fines, interest, penalties, costs, and expenses that may have accrued or been imposed
thereon within thirty (30) days after final determination of Lessee's contest, opposition, or
objection to such Imposition. In the event of any such contest and the final determination thereof
adversely to Lessee, Lessee shall, before any fine, interest, penalty, or cost may be added thereto
for nonpayment thereof, pay fully and discharge the amounts involved in or affected by such
contest, together with any penalties, fines, interest, costs, and expenses that may have accrued
thereon or that may result from any such contest by Lessee and, after such payment and
discharge by Lessee, Agency will promptly return to Lessee such security as Agency shall have
received in connection with such contest.
(c) Agency shall cooperate reasonably in any such contest permitted by this Section
608, and shall execute any documents or pleadings reasonably required for such purpose. Any
such proceedings to contest the validity or amount of Imposition or to recover back any
Imposition paid by Lessee shall be prosecuted by Lessee at Lessee's sole cost and expense; and
Lessee shall indemnify and save harmless Agency against any and all loss, cost, or expense of
any kind, including, but not limited to, reasonable attorneys' fees and expenses, which may be
imposed upon or incurred by Agency in connection therewith.
I. [§ 609] Notice of Possessory Interest: Payment of Taxes and Assessments on
Value of Entire Property
In accordance with California Revenue and Taxation Code Section 107.6(a), Agency
states that by entering into this Lease, a possessory interest subject to property taxes shall be
created. Lessee or other party in whom the possessory interest is vested shall be subject to the
payment of property taxes levied on such interest.
Lessee acknowledges and agrees that the Site and/or the Improvements thereon, and any
possessory interest therein, shall at all times after the commencement of this Lease, be subject to
ad valorem taxes levied, assessed or imposed on such property, and that Lessee shall pay taxes
upon the assessed value of the entire property, and not merely upon the assessed value of its
leasehold interest; provided that if permitted by law, Lessee shall be required to pay ad valorem
taxes only upon the assessed value of its leasehold interest. If for any reason the taxes levied on
such property in any year during the Term of this Lease are less than the taxes which would have
been levied if the entire property had been assessed and taxed in the same manner as privately
owned property, Lessee shall pay such difference to Agency within thirty (30) days after the
taxes for such year become payable and in no event later than the delinquency date of such taxes
established by law.
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J. [§ 610] Other Liens
Lessee shall not, directly or indirectly, create or permit to be created or to remain, and
will promptly discharge, at its expense, any mortgage, lien, encumbrance or charge on or pledge
of the Site or the Improvements, or fixtures and furnishings, or any part thereof, or Lessee's
interest therein, or the rent, additional rent or other sums payable by Lessee under this Lease,
other than (i) such Mortgages as are permitted pursuant to Section 901, and (ii) as necessary in
connection with the financing of furniture, fixtures and equipment for the Improvements. Lessee
shall notify Agency promptly of any lien or encumbrance which has been created on or attached
to the Site and Improvements, or to Lessee's leasehold estate therein, whether by act of Lessee or
otherwise. The existence of any mechanic's, laborer's, materialmen's, supplier's or vendor's
lien, or any right in respect thereof, shall not constitute a violation of this Section if payment is
not yet due upon the contract or for the goods or services in respect of which any such lien has
arisen, or if such lien has been discharged by the posting of bonds or other lien -release security
as is provided for such discharge by law.
VII. [§ 700] OWNERSHIP OF AND RESPONSIBILITY FOR IMPROVEMENTS
A. [§ 701] Ownership During Term and at Termination
All Improvements on the Site constructed or installed by Lessee as permitted or required
by this Lease shall, during the Term of this Lease, be and remain the property of Lessee. All
Improvements located on the Site, whether existing thereon at the commencement of the Term of
this Lease, or constructed or installed thereon by Lessee as permitted or required by this Lease,
shall, at the expiration or sooner termination of the Term of this Lease, be and remain the
property of Agency. Subject to Lessee's rights and obligations set forth in this Lease relating to
alterations and additions, Lessee shall have no right at any time to waste, destroy, demolish or
remove any of the Improvements. Lessee's rights and powers with respect to the Improvements
are subject to the terms and limitations of this Lease. Agency and Lessee covenant for
themselves and all persons claiming under or through them that the Improvements are real
property.
B. [§ 702] Removal of Fixtures and Furnishings at Termination
At the expiration or sooner termination of the Term of this Lease, Agency may, at
Agency's election, demand the removal from the Site and Improvements, at Lessee's sole cost
and expense, of all fixtures and furnishings, or of certain fixtures and/or furnishings, as specified
in the notice provided for below. A demand to take effect at the normal expiration of the Term
shall be effected by notice given not less than sixty (60) days prior to the expiration date.
A demand to take effect on any other termination of the Lease shall be effectuated by notice
given in or concurrently with notice of such termination or within ten (10) days after such
termination.
At the expiration or sooner termination of the Term of this Lease, Lessee may, at
Lessee's sole cost and expense, remove from the Site and Improvements any and all fixtures and
furnishings. Any fixtures and/or furnishings not removed by Lessee within thirty (30) days of
the termination of the Lease shall be deemed to be abandoned by Lessee and shall, without
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compensation to Lessee, then become Agency's property, free and clear of all claims to or
against them by Lessee or any third person, subject to security interests therein to the extent
permitted by this Lease.
Lessee shall defend, indemnify and hold harmless Agency against all liability and loss
arising from any such claims or from Agency's exercise of the rights conferred by this Section
702.
C. [§ 703] Maintenance and Repair of Improvements
Lessee agrees to assume full responsibility for the operation and maintenance of the Site
and the Improvements and all fixtures and furnishings thereon or therein, and all sidewalks and
to the extent required by the Development Agreement, landscaping within the public right of
way adjacent to the Site, throughout the Term hereof without expense to Agency unless
otherwise specified herein, and to perform all repairs and replacements necessary to maintain and
preserve the Site and the Improvements and fixtures and furnishings and sidewalks and
landscaping in a decent, safe, and sanitary condition in a manner satisfactory to Agency and in
compliance with all applicable laws. Lessee agrees that Agency shall not be required to perform
any maintenance, repairs, or services or to assume any expense not specifically assumed herein
in connection with the Site and the Improvements, fixtures and furnishings, and sidewalks and
landscaping.
The condition of the Improvements required to be maintained hereunder upon completion
of the work of maintenance or repair shall be equal in value, quality, and use to the condition of
such Improvements before the event giving rise to the work.
D. [§ 704] Waste
Lessee shall not commit or suffer to be committed any waste or impairment of the Site or
the Improvements, or any part thereof.
Lessee agrees to keep the Site and the Improvements clean and clear of refuse and
obstructions, and to lawfully dispose of all garbage, trash, and rubbish.
E. [§ 705] Alteration of Improvements
Lessee shall not make or permit to be made any alteration of, addition to or change in the
Improvements, other than (a) routine maintenance, repairs, interior decoration and minor interior
alterations or (b) alterations, additions or changes not open to public view which cost in the
aggregate less than an amount equal to Five Hundred Thousand Dollars ($500,000) escalated
from the Agreement Date in accordance with the Consumer Price Index, nor demolish all or any
part of the Improvements, without the prior written consent of Agency's Executive Director. In
requesting such consent, Lessee shall submit to Agency detailed plans and specifications of the
proposed work and an explanation of the need and reasons thereof.
Notwithstanding the prohibition in this Section 705, Lessee may make such changes,
repairs, alterations, improvements, renewals or replacements to the Improvements as are required
by reason of any law, ordinance, regulation or order of a competent government authority.
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F. [§ 706] Damage to or Destruction of Hotel and Improvements
1. [§ 707] Lessee to Give Notice
In case of any damage to or destruction of the Hotel or the Improvements, or any part
thereof, in excess of an amount equal to Five Hundred Thousand Dollars ($500,000) escalated
from the Agreement Date in accordance with the Consumer Price Index, Lessee shall within ten
(10) days after Lessee becomes aware of such damage or destruction give written notice thereof
to Agency generally describing the nature and extent of such damage or destruction.
2. [§ 708] Restoration
(a) Lessee shall be responsible for the restoration of the Hotel or other Improvements
in accordance with the damage and destruction clauses of this Lease.
(b) In case of any damage to or destruction of the Hotel or other Improvements, or
any part thereof, Lessee shall commence the restoration, replacement or rebuilding of the
Improvements with such alterations and additions as may be approved by the Agency (such
restoration, replacement, rebuilding alterations and additions, together with any temporary
repairs and property protection pending completion of the work being herein called
"Restoration") within thirty (30) days of such damage or destruction, plus any additional period
reasonably required to obtain any Net Insurance Proceeds to be used to pay all or a portion of the
cost of such Restoration, and shall complete such Restoration within a reasonable period of time
thereafter.
(c) As used herein, the term "Net Insurance Proceeds" means the gross insurance
proceeds paid by an insurer to Lessee for loss or damage to the Improvements on the Site and
Improvements, less any and all costs and expenses (including, but not limited to reasonable
attorneys' fees) incurred to recover said proceeds. Lessee agrees to promptly commence and
prosecute to completion the settlement of insurance proceeds with respect to any event of
damage or destruction of the Improvements on the Site.
(d) Lessee agrees that, notwithstanding any other provision of this Lease, upon any
event of damage or destruction to the Improvements, Lessee shall at its sole cost and expense
(whether or not Lessee terminates or intends to terminate this Lease pursuant to Section 710
below) immediately take or cause to be taken such and under and complete such work as is
necessary to assure the safe condition of the damaged Improvements pending the ultimate
disposition of the Improvements. In any instance where Lessee may elect to terminate this Lease
rather than restore the Improvements pursuant to Section 710 below, if Lessee does not terminate
this Lease, Lessee shall restore the Improvements.
3. [§ 7091 Application of Insurance Proceeds
Insurance proceeds carried under Article X which are received on account of any damage
to or destruction of the Site or the Improvements thereon, or any portion thereof, (less the costs,
fees and expenses incurred in the collection thereof, including without limitation attorney's fees
and expenses) and if Lessee shall not make the election permitted in Section 710 below, shall be
applied as follows:
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(1) Within a reasonable time and in any event within 180 days after the
damage to or destruction of the Hotel or other Improvements, Lessee shall furnish, or cause to be
furnished to Agency and any Mortgagee evidence satisfactory to Agency and the Mortgagee (a)
of the total cost of Restoration of the damaged or destroyed Improvements pursuant to Section
708 and (b) that the total amount of money available will, when added to the insurance proceeds
received and available to pay for the Restoration pursuant to the terms of this Section 709, be
sufficient to pay the cost of such Restoration.
(2) Net Insurance Proceeds received on account of any damage to or
destruction of the Improvements, or any part thereof, shall be paid to Lessee or as Lessee may
direct (except that, during the term of any Mortgage, such Net Insurance Proceeds shall be paid
to the Mortgagee which holds the highest priority Mortgage, if required by such Mortgagee)
from time to time as Restoration progresses, solely to pay (or reimburse Lessee for) the cost of,
Restoration. Upon receipt by Agency and any Mortgagee of evidence that Restoration has been
completed and the cost thereof paid in full or has been adequately provided for, and that there are
no mechanic's or similar liens for labor or materials supplied in connection therewith which have
not been adequately provided for, the balance, if any, of such Net Insurance Proceeds shall be
paid to Lessee.
(3) Any Net Insurance Proceeds held by the recipient on any termination of
this Lease and not required to be paid to Agency pursuant to the provisions of this Lease shall be
paid first to the expenses of clearing the Site of any rubble, and next to the Mortgagee as its
interests may appear, and next to Lessee.
G. [§ 710] Damage or Destruction During Final Years of Term
Notwithstanding Sections 708 and 709 to the contrary, in the event of major damage or
destruction to the Improvements on the Site during the last ten years of the Term of this Lease,
Agency shall not unreasonably withhold its approval if Lessee requests that this Lease be
terminated on thirty (30) days' notice, provided Lessee first complies with all of the following
conditions:
1. Lessee shall give Agency notice of the damage or destruction within ten
(10) days after the event causing such damage and destruction.
2. Lessee shall give Agency notice requesting that this Lease be terminated
as a result of such damage or destruction within forty-five (45) days after
settlement of insurance proceeds, but in any event within one hundred
eighty (180) days after the event causing such damage or destruction.
3. Lessee shall pay to Agency all applicable rents to the date of such
termination.
4. Lessee shall clear and remove all debris from the Site, restore the Site to a
safe and neat condition, deliver possession of the Site to Agency, and shall
quitclaim all right, title, and interest in the Site to Agency.
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5. Lessee shall transfer to Agency all Net Insurance Proceeds resulting from
the casualty to be retained by Agency without limitation as to use.
Major damage or destruction to the Improvements as used in this Section means such
damage or destruction that the cost of restoration will exceed fifty percent (50%) of the cost to
replace the Improvements on the Site in their entirety.
H. [§ 711 ] Faithful Performance and Labor and Material (Pa ent) Bonds:
Indemnification; Nonresponsibility Notices
(a) Lessee agrees to hold harmless Agency and City, and to indemnify Agency and
City against all claims, liabilities, costs and expenses, for labor and materials in connection with
all construction, repairs or alterations on the Site and Improvements and the cost of defending
against such claims, including reasonable attorney's fees.
(b) Lessee agrees to procure, or cause the procurement of, contractor's bonds
covering labor, materials, and faithful performance for construction on the Site and
Improvements and the Improvements in accordance with the following requirements:
As to the initial construction of the Improvements required by this Lease,
such bonds shall be in an amount equal to one hundred percent (100%) of
the total sum of the construction prices to be paid to each sub -contractor
whose sub -contract has a contract price in excess of $100,000, and shall be
accompanied by the corporate guarantee of the general contractor in an
amount equal to one hundred percent (100%) of the sum of the
construction price in the contract entered into by Lessee and its general
contractor.
2. As to subsequent work involving repair or alteration of the Improvements
in an aggregate amount exceeding $500,000 plus escalations to such
amount after the date of this Lease in accordance with the applicable
Consumer Price Index, such bonds shall be in the amount equal to one
hundred percent (100%) of the construction price in the contract entered
into by Lessee and its general contractor. Subsequent work in an
aggregate amount of $500,000 (plus escalations to such amount after the
Agreement Date in accordance with the Consumer Price Index) or less
shall not be subject to bonding requirements.
Said bonds and the construction contract must first be approved in writing as to content and form
by Agency. Lessee shall, prior to commencement of construction, deliver to Agency a certificate
or certificates from the bonding company or companies issuing the aforesaid bonds, naming
Agency and City as additional insureds under said bonds.
(c) The provisions of paragraphs (a) and (b) of this Section shall be applicable to
construction, repairs or alterations to the Site and Improvements and the Improvements at all
times during the Lease Term.
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(d) Agency shall have the right to post and maintain on the Site and the
Improvements any notices of non -responsibility provided for under applicable law.
VIII. [§ 8001 ASSIGNMENT, SUBLETTING, TRANSFER
A. [§ 801 ] Warranty Against Speculation
(a) Lessee hereby represents and warrants that this Lease, the construction of the
buildings, and its other undertakings pursuant hereto are and will be used for the purpose of
redevelopment of the Site and not for speculation in land holding. Lessee further recognizes
that:
1. The importance of the redevelopment of the Site to the general welfare of
the community; and
2. The fact that a change in ownership or control of Lessee or of a part
thereof, or any other act or transaction involving or resulting in a change
in ownership or with respect to the identity of the parties in control of
Lessee or the degrees thereof, is for practical purposes a transfer or
disposition of the Site and Improvements; and
3. The Site is not to be acquired or used for speculation, but only for
development by Lessee in accordance with this Lease.
(b) The qualifications and identity of -Lessee, and its principals, are of particular
concern to the community and Agency. Lessee further recognizes that it is because of such
qualifications and identity that Agency is entering into this Lease with Lessee.
B. [§ 802] Prohibition Against Transfer
(a) Lessee shall not, except as permitted by this Lease, make any Transfer,
hereinafter defined, to any person or entity (a "Transferee"), without the prior written consent of
the Agency and any permitted Mortgagee. Any purported Transfer not permitted by this Article
VIII or Article IX shall be ipso facto null and void, and no voluntary or involuntary successor to
any interest of Lessee under such a Transfer shall acquire any rights pursuant to this Lease.
These restrictions shall be binding on any successors, heirs or permitted Transferee of Lessee.
"Transfer," as used herein, shall mean any assignment or attempt to assign this Lease or any
right herein, any total or partial transfer, sale, assignment, lease, sublease, license, franchise, gift,
hypothecation, mortgage, pledge, encumbrance or the like, excluding, however, each of the
following: (a) the foreclosure of a permitted Mortgage or the acceptance of a deed in lieu of
foreclosure by a permitted Mortgagee; (b) the subsequent Transfer by a permitted Mortgagee of
an interest acquired pursuant to (a); (c) the acquisition at a foreclosure sale in connection with a
permitted Mortgage by any third party; and (d) the execution of a new or amended Hotel
management agreement with Mayer Hospitality Group LLC or affiliate, the execution of a new
or amended Hotel franchise agreement with Hilton Franchise, LLC, or the execution of a new or
amended Hotel management agreement or Hotel franchise agreement with any other entity that is
first approved in writing by Agency pursuant to Section 502 of this Lease. Persons or entities
who are permitted Transferees under the immediately preceding clauses (a) through (d),
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inclusive, shall enjoy the rights of a Transferee only on the condition that, except for approved
hotel franchisors and approved hotel management companies, they accept and agree in a writing
approved by the Agency to be bound by all of the provisions of this Lease, including but not
limited to all obligations of Lessee hereunder.
(b) This prohibition shall not be deemed to prevent (i) the granting of easements or
permits for the development of the Site as reasonably approved by Agency, (ii) the renting or
subleasing or licensing of space for occupancy consistent with the customary uses and practices
of a hotel and related facilities, (iii) granting any security interests expressly permitted under this
Lease in accordance with the provisions of this Lease, or (iv) the assignment of this Lease to any
affiliate of Lessee or joint venture, provided Lessee submits evidence satisfactory to Agency that
the principals who own and control Lessee will maintain a majority controlling interest after
consummation of such transaction and will have the ability to maintain a majority controlling
interest throughout the Term of this Lease.
(c) Lessee may Transfer the whole or any part of the Site and Improvements after
recordation of a Release of Construction Covenants pursuant to Section 410 with the prior
written consent of the Agency subject to the rights of any Mortgagee under Article IX of this
Lease, which consent shall not be unreasonably withheld in the event that all conditions of this
Section 802 are met, and provided that Lessee is not in default hereunder. Lessee shall only
Transfer the Site and Improvements and Lessee's rights therein as a whole and is not permitted
to subdivide the Site and Improvements and its rights for the duration of the Lease without the
prior written approval of the Agency.
(d) Such approval shall be given by Agency if
At the time of such assignment, this Lease shall be in full force and effect
and either no default then exists or no default will exist upon
consummation of the Transfer;
2. Agency determines in its sole discretion that the following Transfer
requirements are met: (i) such assignment is made to a responsible third
party who will undertake Lessee's responsibilities under this Lease to use
and develop the Site in accordance with this Lease; (ii) if the assignment
occurs prior to the issuance of a Release of Construction Covenants
pursuant to Section 410 of this Lease that such third party shall
demonstrate qualifications and experience with respect to the type of
development proposed herein to assure the development and operation of
the Improvements equal to or greater than the qualifications and
experience of Lessee; and (iii) such third party shall demonstrate sufficient
financial resources or commitments to assure operation (and, if the
assignment occurs prior to the issuance of a Release of Construction
Covenants pursuant to Section 410 of this Lease, development) of the Site
in accordance with this Lease;
3. The Transferee shall have executed an express assumption, in form and
substance first approved in writing by Agency, of the obligations and
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liabilities of Lessee under this Lease arising on and after the effective date
of the Transfer;
4. The Transferee shall have a Net Worth equal to at least Fifty Million
Dollars ($50,000,000), subject to increase on the fifth (5"') anniversary of
the Agreement Date and every five (5) years thereafter in accordance with
the escalation of the Consumer Price Index during each such five (5) year
period, or, for any Transfer proposed after the issuance by Agency of a
Release of Construction Covenants for the Site, such other evidence as
may be reasonably satisfactory to Agency documenting the financial
wherewithal of the Transferee to successfully operate the Improvements
and the Site; and
5. The Transferee shall have experience in the operation and management of
a hotel of the type and character located on the Site and Improvements, or
shall agree and covenant as an additional obligation under this Lease to at
all times cause the Hotel to be operated and managed by a person, first
approved in writing by Agency's Executive Director, who has substantial
experience in managing and operating a hotel of similar type and
character.
(e) No voluntary or involuntary successor in interest of Lessee shall acquire any
rights or powers under this Lease except as expressly permitted under this Lease. This Lease
may not be assigned, nor may a transfer of interest take place without the express, prior written
consent of Agency and, to the extent required by the applicable loan documents, the holder of
any Mortgage obtained in accordance with Section 901 of this Lease.
(f) During the existence of this Lease, Lessee shall promptly notify Agency of any
and all changes whatsoever in the identity of the parties in control of Lessee, or a change in the
degree thereof, of which it or any of its officers have been notified or otherwise have knowledge
or information.
(g) In the absence of specific express written provision to the contrary by Agency, a
Transfer of the Site and Improvements, or portion thereof, or approval thereof by Agency, shall
be deemed to relieve the Lessee or any other party from any obligations under this Lease arising
on or after the effective date of the Transfer; provided, however, that a Mortgagee shall be
deemed to be released from and after the date of a Transfer from such Mortgagee.
(h) Lessee shall only Transfer the Site and Improvements and Lessee's rights therein
as a whole and is not permitted to subdivide the Site and Improvements and its rights for the
duration of the Lease without the prior written approval of Agency.
(i) No provision hereof authorizing encumbrance of Lessee's interest herein shall be
construed to authorize encumbrance of Agency's fee title to the Site or Agency's interest under
this Lease, and Lessee shall not by any act or deed cloud Agency's fee title or Agency's interest
under this Lease.
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Notwithstanding any other provision of this Lease to the contrary, Agency
approval of a Transfer of this Lease or of any interest herein shall not be required in connection
with any of the following:
(i) Any Transfer to any entity or entities in which one or a
combination of Lessee, Robert L. Mayer, and the immediate family members of Robert L.
Mayer, directly or indirectly, retain a minimum of fifty-one percent (51 %) of the ownership or
beneficial interest and retain management control.
(ii) Transfers resulting from the death or mental or physical incapacity
of an individual.
(iii) Transfers or assignments in trust for the benefits of spouse,
children, grandchildren, or other family members.
(iv) The conveyance or dedication of any portion of Lessee's interest in
the Site to the City or other appropriate governmental agency, or the granting of easements or
permits in accordance with this Lease where required to facilitate the development or operation
of the Site.
(v) The leasing of any part or parts of a building or structure. for
occupancy, or entering into of any concession agreements, licenses, or other contracts in the
normal course of owning and operating the Improvements on the Site, provided that all
applicable requirements of this Lease have been met.
(vi) A Transfer of stock in a publicly held corporation or the transfer of
the beneficial interest in any publicly held partnership or real estate investment trust.
C. [§ 803] Investigation of Proposed Transferee; Costs
(a) In the event that Lessee requests Agency's written consent to a proposed Transfer
pursuant to Article VIII or Article IX of this Lease, Lessee agrees to provide Agency with such
information, including financial statements as Agency may reasonably require in order to
evaluate the solvency, financial responsibility, and relevant business acumen and experience of
any proposed Transferee. Such information shall include, without limitation, a balance sheet of
the proposed Transferee as of a date within ninety (90) days of the request for Agency's consent
and statements of income or profit and loss of the proposed subtenant or assignee for the two-
year period preceding the request for Agency's consent, if the same be available (or such other
similar information as shall be available at the time the request for -approval of the Transfer is
made), and a written statement in reasonable detail as to the business and experience of the
proposed Transferee during the five (5) years preceding the request for Agency's consent.
Within twenty (20) Business Days after the receipt of Lessee's written notice requesting
Agency approval of an Transfer, Agency shall respond in writing by stating what further
information, if any, Agency reasonably requires in order to determine whether or not to approve
the requested Transfer. Upon receipt of such a timely response, Lessee shall promptly furnish to
Agency such further information as may be reasonably requested.
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Lessee's request for approval of a Transfer and delivery of necessary information for
financing purposes shall be deemed complete fifteen (15) Business Days after Agency's receipt
thereof and Lessee's request for approval of a Transfer and delivery of necessary information for
all other types of Transfer shall be deemed complete twenty (20) Business Days after Agency's
receipt thereof if Agency does not deny approval or if no timely response requesting further
information regarding the proposed assignee is delivered to Lessee, or, if such a timely response
requesting further information is received, on the date which is fifteen (15) Business Days after
the date that Lessee delivers such additional information to Agency. None of the foregoing shall
restrict Agency's rights to deny approval of any Transfer not found acceptable by Agency
pursuant to this Lease. Any Transfer requiring Agency's consent shall only be effective upon
Agency's written consent to such Transfer.
Agency shall approve or disapprove any requested Transfer for financing purposes
requiring Agency approval within twenty (20) Business Days after Lessee's request therefor is
accepted as complete or is deemed complete, and Agency shall approve or disapprove any other
type of requested Transfer requiring Agency approval within thirty (30) Business Days after
Lessee's request therefor is accepted as complete or is deemed complete. Any disapproval shall
be in writing and shall specify the reasons for the disapproval and, if applicable, the conditions
required to be satisfied by Lessee in order to obtain approval. If Lessee's initial notice
requesting approval of a Transfer for financing purposes (but not any other type of Transfer)
states that the Transfer will be deemed approved unless rejected within the time required in this
Lease, Agency's failure to timely disapprove the Transfer shall be conclusively deemed to
constitute an approval.
(b) If Agency consents to any Transfer pursuant to Article VIII or Article IX, such
consent shall not be effective unless and until Lessee gives Agency notice of the Transfer and a
copy of any documents effecting and/or evidencing such Transfer, and unless and until any such
Transferee (other than a sublessee) assumes all of the obligations and liabilities of Lessee under
this Lease.
(c) Bankruptcy. It is acknowledged and agreed that this Lease is a lease of real
property within the meaning of Subsection 365(b) (3) of the Bankruptcy Code. To the extent not
prohibited by provisions of the Bankruptcy Code, 11 U.S.C. Section 101 et seq., including
Section 365(f)(1) thereof, Lessee on behalf of itself, creditors, administrators and assigns waives
the applicability of Sections 541 (c) and 365(e) of the Bankruptcy Code of 1978 unless the
proposed assignee of the Trustee for the estate of the bankrupt meets Agency's standards for
consent. Agency has entered into this Lease with Lessee in order to obtain for the benefit of the
Site the unique types of facilities, businesses, services, and goods which Lessee can bring to the
Site; the foregoing prohibition on Transfer or subletting is expressly agreed to by Lessee in
consideration of such fact. Any person or entity to which this Lease is assigned pursuant to the
provisions of the Bankruptcy Code shall be deemed without further act or deem to have assumed
all of the obligations arising under this Lease on and after the date of such Transfer. Any such
assignee shall upon demand execute and deliver to Agency an instrument confirming such
assumption.
(d) Agency's Fee. Lessee agrees to reimburse Agency for Agency's reasonable costs
and attorneys' fees incurred in connection with the processing and documentation of any
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requested Transfer, subletting, transfer, change of ownership, or hypothecation of this Lease or
Lessee's interest in and at the Site, or any party thereof, which required Agency's approval
hereunder, in an amount not to exceed Two Thousand Five Hundred Dollars ($2,500.00) for each
such Transfer (which amount shall be adjusted each year after the Agreement Date in accordance
with percentage increases in the Consumer Price Index).
(e) No Waiver. The acceptance by Agency of any payment due hereunder from any
other person shall not be deemed to be a waiver by Agency of any provision of this Lease or to
be a consent to any Transfer or subletting. Consent by Agency to one or more Transfers of this
Lease or to one or more sublets of the Site shall not operate as a waiver or estoppel to the future
enforcement by Agency of its rights pursuant to the provisions of this Lease.
IX. [§ 900]
MORTGAGES
A. [§ 901] Leasehold Mortgages
(a) From time to time during the term of this Lease, Lessee shall have the right to
mortgage, pledge, deed in trust, assign rents, issues, and profits (for purposes of security if
required by any lender), enter into capitalized leases or other financing mechanisms in
connection with the acquisition of furniture, fixtures, and equipment for the Hotel, or otherwise
encumber the interest of Lessee under this Lease, in whole or in part, and any interests or rights
appurtenant to this Lease, and to assign or pledge the same as security for any debt (the holder of
any such mortgage, pledge or other encumbrance, and the beneficiary of any such deed of trust
being hereafter referred to as "Mortgagee" and the mortgage, pledge, deed of trust, or other
instrument hereafter referred to as "Mortgage"), upon and subject to each and all of the
following terms and conditions:
1. Lessee shall not make or enter into an agreement to make any Mortgage
without the prior written approval of Agency. Upon Lessee's request for approval of a proposed
Mortgage and Lessee's submission to Agency of such information concerning the proposed
Mortgage as Agency may reasonably request, Agency shall not unreasonably delay its approval
or disapproval of the proposed Mortgage and, in any event, shall approve or disapprove the
proposed Mortgage within twenty (20) Business Days. The Agency's Executive Director shall
be authorized to approve minor changes to this Lease as reasonably requested by a proposed
Mortgagee.
2. The Mortgage shall cover no interest in any real property other than
Lessee's interest in the Site, the Hotel, and other Improvements or some portion thereof, and the
leasehold estate of Lessee under this Lease. The Mortgage shall state on its face that it does not
encumber in any way Agency's fee interest in the Site and Agency's interest under this Lease.
3. Prior to the issuance of the Release of Construction Covenants for the
Hotel Addition, any new or increased Mortgages created after the Agreement Date may be made
only for the purposes of financing or refinancing the Mortgage(s) encumbering the Site as of the
Agreement Date and for financing additional Project Costs. "Project Costs" as used herein
means all of the actual costs and expenses incurred by Lessee and/or a Mortgagee to plan,
design, engineer, finance, construct, supervise, inspect, and insure the development work to be
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performed by or on behalf of Lessee for or in connection with the development of the Hotel
Addition and other Improvements required to be constructed/installed under this Lease after the
Agreement Date, to install fixtures, furniture, machinery, and equipment in the Expanded Hotel,
and for customary and reasonable pre -opening expenses.
4. Lessee may refinance the property after the issuance of a Release of
Construction Covenants by Agency, provided that Lessee submits evidence satisfactory to the
Agency demonstrating that the loan as refinanced is fully subordinate to the Agency's fee title
and all of the Agency's rights under this Lease and obtains the prior written consent of Agency
to the refinancing, which consent shall be granted provided that the Mortgage is given to a
responsible bona fide institutional lender.
5. Any Mortgage is to be given only to a responsible bona fide institutional
lender. For the purposes hereof the term "institutional lender" shall mean any bank, savings and
loan association, thrift and loan association, savings bank, pension fund, insurance company, real
estate investment trust or any other comparable or similar entity authorized to make loans in the
State of California.
6. All rights acquired by said Mortgagee under said Mortgage shall be
subject to each and all of the covenants, conditions and restrictions set forth in this Lease, and to
all rights of Agency thereunder, none of which covenants, conditions and restrictions is or shall
be waived by Agency by reason of the giving of such Mortgage, except as expressly provided in
this Section 900. Notwithstanding any foreclosure of any such Mortgage, Lessee shall remain
liable for the payment of the accrued but unpaid rent reserved in this Lease while Lessee remains
in possession of the Site and Improvements.
7. Promptly upon the recording of a Mortgage, Lessee shall, at its own
expense, cause to be recorded in the Official Records of Orange County a written request
executed and acknowledged by Agency for a copy of all notices of default and all notices of sale
under the Mortgage as provided by applicable law. Inclusion of a request for notice having the
effect described above in the body of the recorded Mortgage shall constitute compliance with
this provision.
(b) If Lessee encumbers its leasehold estate by way of a Mortgage in accordance with
this Section 900, and if such Mortgagee has registered its name and address in writing with the
Agency, then this Lease shall not be terminated or canceled on account of any default by Lessee
in the performance of the terms, covenants or conditions hereof until Agency shall have
complied with the provisions of Sections 902 through 905 as to the Mortgagee's rights to cure
and to obtain a new lease.
B. [§ 902] Rights and Obligations of Leasehold Mortgagees
If Lessee, or Lessee's successors or assigns, shall mortgage the leasehold interest herein
demised, then, as long as any such Mortgage shall remain unsatisfied of record, the following
provisions shall apply:
1. If the holder of any Mortgage on the leasehold interest herein demised
shall register with Agency its name and address in writing, no notice of default by Agency to
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Lessee shall be deemed to have been duly given unless and until a copy thereof has been mailed
to the Mortgagee by registered or certified mail at the address registered with Agency.
2. In the event Lessee shall be in default hereunder, the Mortgagee shall, at
any time prior to the termination of this Lease (which termination can occur only after notice to
Mortgagee and an opportunity to cure in accordance with this Article IX) and without payment
of any penalty, have the right, but not the obligation, to pay all of the rents due hereunder, to
effect any insurance, to pay any taxes and assessments (subject to Agency's right to cure under
Section 605 of this Lease), to make any repairs and improvements, to do any other act or thing
required or permitted of Lessee hereunder, and to do any other thing which may be necessary
and proper to be done in the performance and observation of the agreements, covenants and
conditions hereof to prevent termination of this Lease. All payments so made and all things so
done and performed by such Mortgagee shall be accepted by Agency and shall be effective to
prevent a termination of this Lease as the same would have been if made, done and performed by
Lessee instead of such Mortgagee. Lessee hereby constitutes and appoints the Mortgagee as
Lessee's agent and attorney in fact with full power coupled with an interest, in Lessee's name,
place and stead, and at Lessee's cost and expense, to enter upon the Site and Improvements and
the Improvements, and perform all acts required to be performed herein. No Mortgagee shall
have the right to take or perform any action hereunder, under its leasehold Mortgage or otherwise
which might result in any detriment to the rights of a prior leasehold Mortgagee with respect to
the same lease or the Site.
3. While any such Mortgage remains unsatisfied of record and an event or
events shall occur which shall entitle Agency to terminate this Lease, Agency shall forbear from
terminating this Lease if and to the extent that such forbearance is required under Section 905 of
this Lease.
4. If the holder of a Mortgage obtained in accordance with Section 901 of
this Lease acquires the leasehold estate created hereunder or otherwise acquires possession of the
Site and Improvements pursuant to available legal remedies, Agency will look to such holder to
perform the obligations of Lessee only from and after the date of foreclosure or possession and
will not hold such holder responsible for the past actions or inactions of the prior Lessee.
Notwithstanding the foregoing, (A) on and after the date of such foreclosure or possession, such
holder shall be required to perform and abide by each and all of the obligations of Lessee under
this Lease and (B) on and after the date of such foreclosure or possession, Agency shall have the
right to enforce each and all of the provisions of this Lease against such holder.
5. The foreclosure of a Mortgage obtained in accordance with Section 901 of
this Lease, or any sale thereunder, whether by judicial proceedings or by virtue of any power of
sale contained in such Mortgage, or any conveyance of the leasehold estate created hereby from
Lessee to the holder of any such Mortgage through, or in lieu of, foreclosure or other appropriate
proceedings in the nature thereof shall not require the consent or approval of Agency or
constitute a default under this Lease, and upon such foreclosure, sale or conveyance Agency
shall recognize the Mortgagee, or any other foreclosure sale purchaser, as the new Lessee
hereunder. In the event that such Mortgagee becomes the Lessee hereunder, or in the event that
the leasehold estate created hereunder is purchased by any other party at a foreclosure sale or by
any other lawful means, such Mortgagee, or such other foreclosure sale purchaser, shall be
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responsible for the performance of the obligations of Lessee under this Lease only for the period
of time that the Mortgagee or such other foreclosure sale purchaser remains Lessee hereunder,
and such Mortgagee or foreclosure sale purchaser shall thereafter have the right to assign this
Lease without need to obtain the approval of Agency. Notwithstanding anything to the contrary
herein: (A) as a precondition to any Mortgagee, foreclosure sale purchaser, or other person
obtaining the rights of Lessee hereunder, such person shall first be required to expressly assume
each and all of the obligations of Lessee under this -Lease pursuant to a written document in form
and substance satisfactory to Agency; (B) such new Lessee shall have no right to construct any
Improvements on the Site unless and until such new Lessee has submitted evidence satisfactory
to Agency that such new Lessee has the financial capability and overall competence to perform
the obligations of Lessee hereunder, provided that this clause (B) shall not require submission of
such evidence if such new Lessee is the holder of a Mortgage obtained in accordance with
Section 901 of this Lease but shall require submission of such evidence if such new Lessee is the
successor of such a holder; and (C) Agency shall have the right of prior written approval over
any prospective operator or manager (including but not limited to such new Lessee) of the Hotel
uses on the Site and Improvements in accordance with Section 502 of this Lease.
6. In the event that the holder of any Mortgage obtained in accordance with
Section 901 of this Lease remedies or causes to be remedied, within the times specified in
Section 905 of this Lease, all monetary defaults of Lessee and all nonmonetary defaults of
Lessee which by their nature are capable of being remedied by such Mortgagee, such Mortgagee
shall have the right within thirty (30) days after all such defaults are remedied to request that
Agency promptly execute and deliver to such Mortgagee a new lease of the Site (naming such
Mortgagee as Lessee) for the remainder of the Term of this Lease with the same agreements,
covenants, and conditions (except for any requirements which have been fulfilled prior to
execution of the Lease) as are contained herein and with priority equal to that hereof, along with
a Quitclaim Deed first approved in writing by the Agency as to form and substance; provided,
however, that if more than one Mortgagee requests such a new lease, the Mortgagee holding the
most senior Mortgage shall prevail; and provided, further, that Agency shall not be required to
execute such new lease earlier than concurrently with the execution of such new lease by such
Mortgagee. Agency shall prepare such new lease at the expense of such Mortgagee, and all costs
incurred by Agency in preparing such new lease (including attorneys' fees) shall be paid to
Agency by such Mortgagee prior to the execution by Agency of such new lease. The execution
of a new lease by Agency pursuant to this paragraph 6 shall automatically and immediately
terminate this Lease. Although not necessary to effect the termination of this Lease, the former
Lessee shall, upon Agency's execution of such new lease, execute any documents and perform
any acts which may be reasonably necessary to evidence the termination of this Lease. Upon
Agency's execution and delivery of such new lease, Agency, at the expense of the new Lessee,
shall take such action as shall be necessary to remove the former Lessee from the Site and
Improvements. Notwithstanding any provision herein, Agency shall not be required to forbear
from terminating this Lease except to the extent required by Section 905 hereof and Agency shall
not be required to execute a new lease after the termination of this Lease in accordance with the
provisions hereof.
7. Anything herein contained to the contrary notwithstanding, the provisions
of this Section 902 shall inure only to the benefit of the holders of Mortgages and, with respect to
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paragraph 5. only, other persons that acquire the leasehold interest created hereunder pursuant to
a foreclosure, sale or conveyance of the type described in paragraph 5.
C. [§ 903] Agency's Forbearance and Right to Cure Defaults on Leasehold
Mortgages
D. [§ 904] Notice
In the event that Lessee's interest under this Lease is subject to any Mortgage, Agency
will simultaneously give to Mortgagee at such address as is specified by the Mortgagee in
accordance with Section 902 hereof, a copy of each notice of default from Agency to Lessee
hereunder at the time of giving such notice or communication to Lessee. Agency will not
exercise any right, power or remedy with respect to any default hereunder, and no notice to
Lessee of any such default and no termination of this Lease in connection therewith shall be
effective unless Agency has given to Mortgagee written notice or a copy of its notice to Lessee
of such default or any such termination, as the case may be.
E. [§ 905] Forbearance by Agency
During the continuance of any Mortgage obtained in accordance with Section 901 of this
Lease and until such time as the lien of such Mortgage has been extinguished:
(A) Agency shall not agree to any mutual termination nor accept any surrender of this
Lease, nor shall Agency consent to any amendment or modification of this Lease, without the
prior written consent of the Mortgagee.
(B) Notwithstanding any default by Lessee in the performance or observance of any
agreement, covenant, or condition of this Lease on the part of Lessee to be performed or
observed, Agency shall have no right to terminate this Lease unless an event of default shall have
occurred and be continuing, Agency shall have given such Mortgagee written notice of such
event of default, and such Mortgagee shall have failed to remedy such default, or caused such
default to be deemed remedied, within the times specified in ( i) and (ii) below.
(i) Should any event of default under this Lease occur, any Mortgagee shall
have ninety (90) days after receipt of written notice from Agency setting forth the nature of such
event of default, and, if the default is such that possession of the Site is reasonably necessary to
remedy the default, a reasonable time after the expiration of such ninety (90) day period, within
which to remedy such default; provided, however that Agency shall not be required to forbear
beyond such initial ninety (90) day period unless (a) the Mortgagee shall have fully cured any
default in the payment of any monetary obligations of Lessee under this Lease within such ninety
(90) day period and shall continue to pay currently such monetary obligations as and when the
same are due, and (b) such Mortgagee shall have acquired Lessee's leasehold estate created
hereby or commenced foreclosure or other appropriate proceedings in the nature thereof within
such ninety (90) day period, or prior thereto, and shall be diligently prosecuting any such
proceeding. Agency agrees that all payments so made and all things so done and performed by
such Mortgagee shall be accepted by Agency and shall be effective to prevent a termination of
this Lease as the same would have been if made, done, and performed by Lessee instead of such
Mortgagee.
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(ii) Any event of default under this Lease which in the nature thereof cannot
be remedied by a Mortgagee shall be deemed to be remedied if the Mortgagee does all of the
following: (a) within ninety (90) days after receiving written notice from Agency setting forth
the nature of an event of default, or prior thereto, the Mortgagee shall have acquired Lessee's
leasehold estate created hereby or shall have commenced foreclosure or other appropriate
proceedings, (b) Mortgagee shall diligently prosecute any such proceedings to completion, (c)
within the ninety (90) day period referred to in (a) above, Mortgagee shall have fully cured any
default in the payment of all monetary obligations of Lessee hereunder and any non -monetary
obligations which do not require possession of the Site and Improvements, and (d) after gaining
possession of the Site, Mortgagee shall perform and abide by each and all of the obligations of
Lessee under this Lease as and when the same are due; provided, however, that Mortgagee shall
not be required to cure any default which occurs prior to the date on which Mortgagee obtains
possession of the Site and which by its nature cannot be cured by such Mortgagee.
(C) In the event that Mortgagee is prohibited by any process or injunction issued by
any court of competent jurisdiction or by reason of any action by any court having jurisdiction of
any bankruptcy or insolvency proceeding involving Lessee from commencing or prosecuting
foreclosure or other appropriate proceedings in the nature thereof, the times specified in
paragraph (B) of this Section 905 for commencing and prosecuting such foreclosure or other
proceedings shall be extended for the period of such prohibition. Notwithstanding anything to
the contrary herein, Agency shall in no event be required to forbear hereunder unless Mortgagee
shall within ninety (90) days after the giving of notice by Agency pay all moneys due and in
respect of which there exists a monetary event of default.
[§ 905.1] Conditions Precedent to MortgaL ee Rights and Agency Forbearance
Agency shall not be required to comply with Sections 902 through 905 of this Lease with
respect to any Mortgage, unless and until a true copy of the original thereof bearing the date and
book and page of recordation thereof, and a certified copy of the original note secured by such
Mortgage has been delivered to Agency together with written notice of the address of the
Mortgagee to which notices may be sent; and in the event of an assignment of such Mortgage,
such assignment shall not be binding upon Agency unless and until a certified copy thereof
bearing the date and book and page of recordation together with written notice of the address of
the assignee thereof to which notices may be sent, have been delivered to Agency.
F. [§ 906] Performance on Behalf of Lessee
In the event that Lessee shall fail to make any payment or perform any act required
hereunder to be made or performed by Lessee, then Agency or Mortgagee may, but shall be
under no obligation to, after such notice to Lessee, if any, as may be reasonable under the
circumstances, make such payment or perform such act with the same effect as if made or
performed by Lessee. Nothing herein shall limit the right of Mortgagee to take action or make a
payment if permitted under its Mortgage. Entry by Agency or Mortgagee upon the Site and
Improvements for such purpose shall not waive or release Lessee from any obligation or default
hereunder (except in the case of any obligation or default which shall have been fully performed
or cured by Mortgagee). Lessee shall reimburse Agency (with interest at the Interest Rate) or
Mortgagee (with interest as provided in the Mortgage) for all sums so paid by Agency or
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Mortgagee and all costs and expenses incurred by Agency and Mortgagee in connection with the
performance of any such act.
G. [§ 907] Nonmerger
There shall be no merger of this Lease, or of the leasehold estate created thereby, with the
fee estate in and to the Site and Improvements by reason of the fact that this Lease, or the
leasehold estate created thereby, or any interest in either thereof, may be held directly or
indirectly by or for the account of any person who shall own the fee estate in and to the Site and
Improvements, or any portion thereof, and no such merger shall occur unless and until all
persons at the time having any interest in this Lease or the leasehold estate, including the
leasehold mortgagee and the holder of any mortgage upon the fee estate in and to the Site and
Improvements shall join in a written instrument effecting such merger.
H. [§ 908] Agency Cooperation
Agency covenants and agrees that it will act and cooperate with Lessee in connection
with Lessee's right to grant leasehold mortgages as herein above provided. At the request of
Lessee or any proposed or existing leasehold mortgagee, Agency shall within a reasonable time
execute and deliver (i) any documents or instruments reasonably requested to evidence,
acknowledge and/or perfect the rights of leasehold mortgagees as herein provided; and (ii) an
estoppel certificate certifying the status of this Lease and Lessee's interest herein and such
matters as are reasonably requested by Lessee or such leasehold mortgagees. Such estoppel
certificate shall include, but not be limited to, certification if true by Agency that (a) this Lease is
unmodified and in full force and effect (or, if modified, state the nature of such modification and
certify that this Lease, as so modified, is in full force and effect), (b) all rents currently due under
the Lease have been paid, and (c) there are not, to Agency's knowledge, any uncured defaults on
the part of Lessee under the Lease or facts, acts or omissions which with the giving of notice or
passing of time, or both, would constitute a default. Any such cstoppel certificate may be
conclusively relied upon by any leasehold mortgagee or assignee of Lessee's interest in this
Lease.
I. [§ 9091 Enforceability
The rights granted herein to a leasehold mortgagee shall be enforceable only by such
leasehold mortgagee. In the event any action or proceeding is brought to enforce or interpret the
provisions hereof or to seek damages or performance or declare the rights of the Parties hereto or
such leasehold mortgagee, the prevailing party including such leasehold mortgagee, if prevailing,
shall be entitled to attorneys' fees, costs and expenses.
J. [§ 910] No Subordination of Agency's Interests
Agency's interest in the Site under this Lease is a vested landlord's reversionary interest
and not just a contractual obligation of Lessee. Notwithstanding anything which is or appears to
be to the contrary in this Lease, Lessee shall not encumber Agency's interest under this Lease or
Agency's fee interest in the Site by any mortgage, deed of trust, lien, security instrument, or
financing conveyance of any kind whatsoever.
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K. [§ 9111 Certificates to Lenders
Lessee and Agency, as the case may be, shall execute, acknowledge, and deliver to any
lender, promptly upon request, its certificate certifying (a) that this Lease is unmodified and in
full force and effect (or, if there have been modifications, that this Lease is in full force and
effect, as modified, and stating the modifications), (b) the dates, if any, to which all rent due
hereunder has been paid, (c) whether there are then existing any charges, offsets, or defenses
against the enforcement by Agency of any agreement, covenant, or condition hereof on the part
of Lessee to be performed and observed (and, if so, specifying the same), and (d) whether there
are then existing any defaults by Lessee in the performance or observance by Lessee of any
agreement, covenant or condition hereof on the part of Lessee to be performed or observed and
whether any notice has been given to Lessee of any default which has not been cured (and, if so,
specifying the same). Any such certificate may be relied upon by a prospective purchaser,
mortgagee, trustee or beneficiary under a deed of trust which encumbers this Lease.
L. [§ 912] Obligations of Mortgagee Upon Acquisition of Leasehold Estate
If the holder of a Mortgage obtained in accordance with Section 901 of this Lease
acquires the leasehold estate created hereunder or otherwise acquires possession of the Site and
Improvements pursuant to available legal remedies, Agency will look to such holder to perform
the obligations of Lessee hereunder only from and after the date of foreclosure or possession and
will not hold such holder responsible for the past actions or inactions of the prior Lessee.
Notwithstanding the foregoing, (A) on and after the date of such foreclosure or possession, such
holder shall be required to perform and abide by each and all of the obligations of Lessee under
this Lease and (B) on and after the date of such foreclosure or possession, Agency shall have the
right to enforce each and all of the provisions of this Lease against such holder. Nothing herein
is intended or shall be construed to limit or restrict Agency's rights and remedies against any
prior Lessee, provided that Agency's pursuit of such remedies shall not affect the rights of the
holder of any Mortgage obtained in accordance with Section 901 of this Lease to the use,
enjoyment, or operation of the Site and Improvements.
X. [§ 10001 INDEMNIFICATION AND INSURANCE
A. [§ 1001 ] Indemnification
Throughout the Term of this Lease, Lessee agrees to and shall defend, indemnify, and
hold harmless Agency, the City and their officers, employees, agents, contractors, and
consultants from and against all claims, liability, loss, damage, costs or expenses (including
reasonable attorneys' fees and court costs) arising from or as a result of the death of any person
or any accident, injury, loss or damage whatsoever caused to any person or to the property of any
person which shall occur on or adjacent to the Site and which shall be directly or indirectly
caused by or based on the Agency's ownership of or interest in the Site or any portion thereof or
any improvements thereon or the condition of the Site or any portion thereof or any
improvements thereon or Lessee's rehabilitation, development, construction, use, or operation of
the Site or any portion thereof or any improvements thereon or any of Lessee's activities under
this Lease, whether such actions or inactions thereof be by Lessee or anyone directly or
indirectly employed or contracted with by Lessee and whether such damage or injury shall
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accrue or be discovered before or after the termination of this Lease. Lessee shall not be
responsible for (and such indemnity shall not apply to) property damage or bodily injury caused
by entry onto the Site and Improvements by Agency pursuant to various provisions of this Lease,
and/or to the extent caused by the willful misconduct or active negligence of the Agency or its
designated employees or agents.
B. [§ 1002] Required Insurance
During the Term of this Lease, Lessee at its sole cost and expense shall:
1. Keep or cause to be kept a policy or policies of insurance against loss or
damage to the Improvements on the Site, resulting from fire, windstorm,
hail, lightning, vandalism, malicious mischief, riot and civil commotion,
and such other perils ordinarily included in extended coverage fire
insurance policies. Such insurance shall be maintained in an amount not
less than one hundred percent (100%) of the full insurable value of the
Improvements as defined herein in Section 1003 (such value to include
amounts spent for construction of the Improvements, architectural and
engineering fees, and inspection and supervision).
2. Maintain or cause to be maintained use and occupancy or business
interruption or rental income insurance against the perils of fire,
windstorm, hail, lightning, vandalism and malicious mischief, riot and
civil commotion, and such other perils ordinarily included in extended
coverage fire insurance policies, in an amount equal to not less than two
times the sum of the highest Participation Rent paid to Agency in any year
under this Lease and twelve (12) months fixed operating expenses of
Lessee, except to the extent such insurance is not commercially available
at commercially reasonable rates due to reasons other than the wrongful
acts or omissions or dangerous or hazardous activities of Lessee.
3. Maintain or cause to be maintained public liability insurance, to protect
against loss from liability imposed by law for damages on account of
personal injury, including death therefrom, suffered or alleged to be
suffered by any person or persons whomsoever, resulting directly or
indirectly from any act or activities of Lessee or under Lessee's control or
direction, and also to protect against loss from liability imposed by law for
damages to any property of any person caused directly or indirectly by or
from the acts or activities in connection with the Site and Improvements of
Lessee or its invitees and sublessees, or any person acting for Lessee, or
under its control or direction. Any such property damage and personal
injury insurance maintained by Lessee at any time during the term of this
Lease shall name Agency, City, and their respective officers, employees
and consultants, as additional insureds and shall also provide for and
protect Agency and City against incurring any legal cost in defending
claims for alleged loss. Such personal injury and property damage
insurance shall be maintained in full force and effect during the entire term
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of this Lease in an amount not less than Ten Million Dollars ($10,000,000)
combined single limit as of the Agreement Date of this Lease, which
minimum amount of coverage shall escalate on the fifth anniversary of the
Agreement Date of this Lease and once every five years thereafter in
proportion to the escalation, if any, during such period in the Consumer
Price Index. Lessee agrees that the provisions of this paragraph 3. as to
maintenance of insurance shall not be construed as limiting in any way the
extent to which Lessee may be held responsible for the payment of
damages to persons or property resulting from Lessee's activities, or
activities of its invitees and sublessees, or the activities of any other
person or persons for which Lessee is otherwise responsible.
4. Maintain or cause to be maintained worker's compensation insurance
issued by a responsible carrier authorized under the laws of the State of
California to insure employers against liability for compensation under the
Worker's Compensation Insurance and Safety Act now in force in
California, or any act hereafter enacted as an amendment or supplement
thereto or in lieu thereof. Such worker's compensation insurance shall
cover all persons employed by Lessee in connection with the Site and
Improvements, and shall cover full liability for compensation under any
such act aforesaid, based upon death or bodily injury claims made by, for,
or on behalf of any person incurring or suffering injury or death in
connection with the Site and Improvements, or the operation thereof by
Lessee.
5. In the event that the holder of a Mortgage obtained in accordance with
Section 901 of this Lease which has registered its name and address with
Agency acquires the leasehold interest created by this Lease, such
Mortgagee shall have the right to self -insure with respect to the risks
specified in this Section 1002 if such Mortgagee is an institutional lender.
C. [§ 1003] Definition of "Full Insurable Value"
The term "full insurable value" as used in Section 1002 shall mean the actual replacement
cost (excluding the cost of excavation, foundation, and footings below the ground level and
without deduction for depreciation) of the Improvements, including the cost of construction of
the Improvements, architectural and engineering fees, and inspection and supervision. To
ascertain the amount of coverage required, Lessee shall cause the full insurable value to be
determined from time to time by the insurer or by a qualified expert mutually acceptable to
Agency and Lessee, not less often than once every three years.
D. [§ 1004] General Insurance Provisions
All insurance provided under Section 1002 of this Lease shall be primary insurance for
the benefit of Lessee, Agency, and City. Said insurance shall also be for the benefit of the
leasehold mortgagee, if any.
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All insurance provided under Section 1002 shall be periodically reviewed by the parties
for the purpose of mutually increasing or decreasing the minimum limits of such insurance, from
time to time, to amounts which may be reasonable and customary for similar facilities of like
size and operation.
The insurance to be provided by Lessee may provide for a deductible or self -insured
retention of not more than One Hundred Thousand Dollars ($100,000.00), with such amount to
increase at such times as Agency may require increases in the policy limits as set forth above;
provided that the percentage increase in the deductible or self -insured retention shall not exceed
the percentage increase in the Consumer Price Index since the last requested adjustment; and
further provided that Lessee may maintain such higher deductibles or self -insured retention as
may be approved in writing by the Executive Director of Agency or his designee. In the event
such insurance does provide for deductibles or self -insured retention, Lessee agrees that it will
fully protect Agency, its boards, officers, and employees in the same manner as these interests
would have been protected had the policy or policies not contained the deductible or retention
provisions.
All insurance herein provided for under Section 1002 shall be effected under policies
issued by insurers of recognized responsibility licensed or permitted to do business in the State
of California, subject to the reasonable approval of the Agency's Executive Director.
Any insurance required to be maintained by Lessee pursuant to Section 1002 may be
taken out under a blanket insurance policy or policies covering other sites or properties, and
other insureds in addition to the parties hereto; provided, however, that any such policy or
policies of blanket insurance shall specify therein, or supplemental written certification from the
insurers under such policies shall specify, the amount of insurance irrevocably allocated to the
coverage to be provided under Section 1002 and provided further, that in all other respects any
such blanket policy shall comply with the other provisions of Section 1002.
All policies or certificates of insurance shall provide that such policies or certificates
shall not be cancelled for nonpayment without at least ten (10) days prior written notice to
Agency and otherwise shall not be cancelled or materially changed without at least thirty (30)
days prior written notice to Agency.
Copies of such policies, or certificates thereof subject to the reasonable approval of
Agency legal counsel, shall be deposited with Agency together with appropriate evidence of
payment of the premiums therefor; and, at least thirty (30) days prior to expiration of any such
policy, copies of renewal policies shall be so deposited.
E. [§ 1005] Failure to Maintain Insurance
If Lessee fails or refuses to procure or maintain insurance as required by this Lease,
Agency shall have the right, at Agency's election, and without notice, to procure and maintain
such insurance. The premiums paid by Agency shall be treated as additional rent due from
Lessee, to be paid on the first day of the month following the date on which the premiums were
paid. Agency shall give prompt notice of the payment of such premiums, stating the amounts
paid and the name of the insured(s).
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F. [§ 1006] Disposition of Insurance Proceeds Resulting from Loss or Damage to
Improvements
(a) Subject to the provisions of paragraph (b) below, proceeds of insurance with
respect to loss or damage to the Improvements to be maintained and repaired by Lessee during
the term of this Lease shall be payable, under the provisions of the policy of insurance, to Lessee,
or, if such loss or damage involves the need for Lessee to obtain any governmental approvals or
permits, jointly to Lessee and Agency, and said proceeds shall constitute a trust fund to be used
for the repair, restoration, or reconstruction of the Improvements in accordance with plans and
specifications approved in writing by Agency.
(b) Notwithstanding the foregoing paragraph, within the period during which there is
an outstanding Mortgage obtained in accordance with Section 901 of this Lease on all or part of
the Site and Improvements, said proceeds shall be made payable as set forth in Sections 708 and
709 of this Lease.
(c) In the event this Lease is terminated by mutual agreement of Agency and Lessee,
and the Improvements are not repaired, restored, or reconstructed, the insurance proceeds shall
be applied first to any payments due under this Lease from Lessee to the Agency, second to
restore the Site to a neat and clean condition, and finally any excess shall be paid to Lessee.
Provided, however, that within any period when there is an outstanding mortgage or deed of trust
upon the Improvements, such proceeds shall be applied first to discharge the debt secured by the
mortgage and then for the purposes and in the order set forth above in this paragraph.
(d) Lessee hereby waives any claim against Agency and City for any loss covered by
insurance of the type specified in Section 1002; and Lessee shall obtain from its insurance
company or companies a waiver of any right of subrogation that it may have against Agency and
City.
XI. [§ 110@ EMINENT DOMAIN
A. [§ 1101] Lessee to Give Notice
In case of a Taking of all or any part of the Site and Improvements, or the
commencement of any proceedings or negotiations which might result in such Taking, Lessee
shall promptly give written notice thereof to Agency generally describing the nature and extent
of such Taking or the nature of such proceedings or negotiations and the nature and extent of the
Taking which might result therefrom, as the case may be.
B. [§ 1102] Total Taking
In case of a Taking of the fee of the entire Site and Improvements, or in case of the taking
of only a part of the Site and Improvements, leaving the remainder of the Site and Improvements
in such location, or in such form, shape, or reduced size as to render the same not effectively and
practicably usable for the conduct thereon of the uses permitted hereunder, this Lease shall
terminate as of the date title vests in the condemning authority or the date the condemning
authority is entitled to possession, whichever first occurs (the "Rate of Taking"). Any Taking
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of the Site and Improvements of the character referred to in this Section 1102 which results in
the termination of this Lease is referred to herein as a "Total Taking."
C. [§ 1103] Partial Taking
In case of a Taking of the Site and Improvements other than a Total Taking (a "Partial
Taking"), (i) this Lease shall remain in full force and effect as to the portion of the Site and
Improvements remaining immediately after such Taking, without any abatement or reduction of
Ground Rent or any other sum payable hereunder, and (ii) Lessee, to the extent the awards or
payments, if any, on account of such Taking shall be sufficient for the purpose, at its expense,
but first subject to Section 1104(a), shall within a reasonable period of time commence and
complete, or cause to be commenced and completed, Restoration of the Site and Improvements
as nearly as possible to its value, condition, and character immediately prior to such Taking, with
such alterations and additions as may be made at Lessee's election pursuant to and subject to the
terms of Section 705, except for any reduction in area caused thereby; provided, however, that in
case of a Taking for temporary use Lessee shall not be required to effect Restoration until such
Taking is terminated.
D. [§ 1104] Application of Awards and Other Paments
Awards and other payments on account of a Taking, less costs, fees, and expenses
incurred in the collection thereof ("Net Awards and Payments") shall be applied as follows:
(a) In case of a taking other than a Total Taking or a Taking for temporary use,
Lessee shall furnish to Agency and any Mortgagee evidence satisfactory to Agency and the
Mortgagee of the total cost of the Restoration required by Section 1103.
(b) Net Awards and Payments received on account of a Taking other than a Total
Taking or a Taking for temporary use shall be held and applied as provided with respect to
proceeds of insurance in Section 1006. The balance, if any, shall be paid to Lessee and Agency
as their respective interests may appear in the Site and the Improvements.
(c) Net Awards and Payments received on account of a Taking for temporary use
shall initially be received by Lessee; provided, however, that the amount of such award shall be
added to Gross Room Revenue for the purpose of calculating Ground Rent under this Lease, not
to exceed however the average Gross Room Revenue of the three (3) years prior to the Taking,
as adjusted for the period of the Taking.
(d) Net Awards and Payments received on account of a Total Taking shall be
allocated as follows:
First: There shall be paid to each Mortgagee an amount equal to the sum of any
unpaid principal amount of the indebtedness secured by the Mortgage, if any, and any interest
accrued thereon, all as of the date on which such payment is made; provided, however, that each
such Mortgagee shall only be paid to the extent of its security in the applicable portion which is
the subject of the taking.
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Second: To the Lessee and the Agency as their respective interests may appear in
the Site and the Improvements; provided, that any payment to a Mortgagee or pursuant to the
preceding paragraph shall be charged against Lessee's interest.
XII. [§ 1200] DEFAULTS, REMEDIES AND TERMINATION
A. [§ 1201] Defaults - General
(a) Subject to the extensions of time set forth in Section 1314 of this Lease, failure or
delay by either Party to perform any term or provision of this Lease and failure or delay by
Lessee to perform any of its obligations that are set forth in the License Agreement referred to in
Recital F and Section 501 of this Lease constitutes a default under this Lease. The Party who so
fails or delays must immediately commence to cure, correct, or remedy such failure or delay, and
shall complete such cure, correction or remedy with reasonable diligence and, in any event, for
monetary defaults within thirty (30) days of such failure or delay, and for non -monetary defaults
within the time reasonably required for cure with reasonable diligence, not to exceed one
hundred and eighty (180) days plus any period or periods of enforced delay required by Section
1314 of this Lease (the "Cure Period").
(b) The injured Party shall give written notice of default to the Party in default,
specifying the default complained of by the injured Party. Except as required to protect against
further damages, and except as otherwise expressly provided in Sections 1207 and 1208 of this
Lease, the injured Party may not institute proceedings against the Party in default until the
expiration of the applicable Cure Period. Agency's exercise of its remedies under this Article
XII shall be subject to the provisions of Article IX of this Lease. Failure or delay in giving such
notice shall not constitute a waiver of any default, nor shall it change the time of default.
(c) Except as otherwise expressly provided in this Lease, any failure or delay by
either Party in asserting any of its remedies or rights as to any default shall not operate as a
waiver of any default or of any such rights or remedies or deprive either such Party of its right to
institute and maintain any actions or proceedings which it may deem necessary to protect, assert,
or enforce any such rights or remedies.
B. [§ 1202] Legal Actions
1. [§ 1203] Institution of Legal Actions
In addition to any other rights or remedies, either Party may institute legal action to cure,
correct, or remedy any default, to recover damages for any default, or to obtain any other remedy
consistent with the purpose of this Lease. Such legal actions must be instituted in the Superior
Court of the County of Orange, State of California, in any other appropriate court in that county,
or in the Federal District Court in the Central District of California.
2. [§ 1204] Applicable Law
The laws of the State of California shall govern the interpretation and enforcement of this
Lease.
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3. [§ 1205] Acceptance of Service of Process
In the event that any legal action is commenced by Lessee against Agency, service of
process on Agency shall be made by personal service upon the Chairman or Executive Director
of Agency, or in such other manner as may be provided by law.
In the event that any legal action is commenced by Agency against Lessee, service of
process on Lessee shall be made by personal service upon an officer of the general partner of
Lessee and shall be valid whether made within or without the State of California, or in such
manner as may be provided by law.
4. [§ 1206] Attorneys' Fees and Court Costs
In the event that either Agency or Lessee shall bring or commence an action to enforce
the terms and conditions of this Lease or to obtain damages against the other party arising from
any default under or violation of this Lease, then each Party shall bear and pay the cost of its own
costs and attorneys fees.
C. [§ 1207] Rights and Remedies are Cumulative
Except with respect to rights and remedies expressly declared to be exclusive in this
Lease, the rights and remedies of the Parties are cumulative, and the exercise by either Party of
one or more of such rights or remedies shall not preclude the exercise by it, at the same or
different times, of any other rights or remedies for the same default or any other default by the
other Party.
D. [§ 1208] Damages
If either Party defaults with regard to any of the provisions of this Lease, the non -
defaulting Party shall serve written notice of such default upon the defaulting Party. If the
default is not commenced to be cured within thirty (30) days after service of the notice of default
and is not cured prior to the expiration of the applicable Cure Period, the defaulting Party shall
be liable to the non -defaulting Party for any damages caused by such default, and the non -
defaulting Party may thereafter (but not before) commence an action for damages against the
defaulting Party with respect to such default.
E. [§ 12091 Specific Performance
If either Party defaults with regard to any of the provisions of this Lease, the non -
defaulting Party shall serve written notice of such default upon the defaulting Party. If the
default is not commenced to be cured within thirty (30) days after service of the notice of default
and is not cured prior to the expiration of the applicable Cure Period, the non -defaulting Party, at
its option, may thereafter (but not before) commence an action for specific performance of the
terms of this Lease pertaining to such default.
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F. [§ 1210] Additional Remedies of Agency
(a) If Lessee defaults with regard to any of the provisions of this Lease, Agency shall
serve written notice of such default upon Lessee. Subject to the provisions of Article IX of this
Lease running in favor of Mortgagee, if the default is not commenced to be cured promptly after
service of the notice of default and/or if the cure is not prosecuted to completion with all due
diligence and in any event prior to the expiration of the applicable Cure Period, Agency, at its
option, may thereafter (but not before):
1. Correct or cause to be corrected said default and charge the costs therefor
to the account of Lessee;
2. Correct or cause to be corrected said default and pay the costs thereof
from the proceeds of any insurance ;
3. Continue this Lease and Lessee's right to possession in effect and enforce
its rights and remedies under the Lease, including the right to recover rent
as it becomes due, as provided in Section 1951.4 of the California Civil
Code.
4. Have a receiver appointed to take possession of Lessee's interest in the
Site and Improvements, with power in said receiver to administer Lessee's
interest therein, to collect all funds available to Lessee in connection with
its operation and maintenance thereof, and to perform all other acts
consistent with Lessee's obligations under this Lease as the court deems
proper;
5. Maintain and operate the Site and Improvements without terminating this
Lease.
6. Terminate this Lease pursuant to Section 1211 hereof, by written notice to
Lessee of its intention to do so.
(b) Agency reserves and shall have the right at all reasonable times to enter the Site
and the Improvements for the purpose of viewing and ascertaining the condition of the same, or
to protect its interests in the Site and the Improvements or to inspect the operations conducted
thereon, subject to the limitations and requirements for Agency rights of access set forth in
Section 405 of this Lease. Any such entry shall be made only after reasonable notice to Lessee.
In the event that such entry or inspection by Agency discloses that the Site or the Improvements
are not in a decent, safe, and sanitary condition, are damaged, or in disrepair, Agency shall have
the right, after thirty (30) days written notice to Lessee and Lessee's failure to cure the problem
within the Cure Period, to have any necessary maintenance or repair work done for and at the
expense of Lessee and Lessee hereby agrees to pay promptly any and all costs incurred by
Agency in having such necessary maintenance or repair work done in order to keep the Site and
the Improvements in a decent, safe, and sanitary condition.
(c) The rights reserved in this Section 1210 shall not create any obligations on
Agency or increase obligations imposed on Agency elsewhere in this Lease, and shall not defeat,
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render invalid, or limit the rights or interests expressly provided in this Lease for the protection
of leasehold mortgagees.
G. [§ 1211] Remedies and Rights of Termination
(a) In the event that at any time during the term of this Lease, and in violation of this
Lease, Lessee shall:
1. Fail to commence and/or complete the construction of the Improvements
as required by this Lease or within the time required by this Lease;
2. Abandon or substantially suspend construction of the Improvements as
required by this Lease prior to the completion thereof and issuance of a
Release of Construction Covenants therefor by Agency;
3. Use the Site and Improvements for any purpose other than those provided
for in this Lease or fail to use and maintain the Site and Improvements in
accordance with Section 501 of this Lease ;
4. Fail or refuse to pay to Agency when due the applicable rents and other
sums required by this Lease to be paid by Lessee, including but not limited
to payments required under Sections 300 et seq. of this Lease;
5. Fail or refuse to pay when due any taxes, assessments, or other
Impositions as required by this Lease;
6. Make or suffer to be made any voluntary or involuntary conveyance,
assignment, sublease, or other Transfer of the leasehold interest in the Site
and Improvements, or any part thereof, or of the rights of Lessee under
this Lease;
7. Commit or suffer to be committed any waste or impairment of the Site or
the Improvements, or any part thereof;
8. Alter the Improvements in any manner except as expressly permitted by
this Lease;
9. Fail to maintain insurance as required by this Lease;
10. Fail to make full repair and restoration of the Improvements in the event
of damage or destruction;
11. Engage in any financing except as permitted by the terms of this Lease, or
any other transaction creating any mortgage on the Site, or placing or
suffering to be placed thereon any lien or other encumbrance, or suffering
any levy or attachment to be made thereon;
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12. Voluntarily file or have filed against it any petition under any bankruptcy
or insolvency act or law, or be adjudicated a bankrupt, or make a general
assignment for the benefit of creditors;
13. Fail to pay when due any payment or charge or otherwise default on any
loan secured by a leasehold mortgage permitted by this Lease ;
14. Abandon or surrender possession of the Site or Lessee's interest therein;
15. Fail to perform any of Lessee's Hazardous Substances covenants ;
16. Fail to perform any obligation of Lessee set forth in the License
Agreement referred to in Recital F and Section 501 hereof; or
17. Fail to perform or comply with any other material term or provision
hereof,
and any such failure or violation shall not be cured or remedied within the applicable Cure
Period; then, in such event, subject to the provisions of Article IX of this Lease running in favor
of any Mortgagee, Agency may, at its option and in addition to any other remedy provided for in
this Lease, terminate the Lease and revest in Agency the leasehold interest theretofore transferred
to Lessee, by written notice to Lessee of its intention to do so.
(b) Upon termination of this Lease pursuant to this Section 1211 it shall be lawful for
Agency to re-enter and repossess the Site without process of law, and Lessee, in such event, does
hereby waive any demand for possession thereof, and agrees to surrender and deliver peaceably
to Agency immediately upon such termination in good order, condition, and repair, except for
reasonable wear and tear. Upon such termination title to all Improvements on the Site specified
in this Lease to remain in Agency shall remain in Agency.
(c) No ejectment, re-entry, or other act by or on behalf of Agency shall constitute a
termination unless Agency gives Lessee notice of termination in writing. Such termination shall
not relieve or release Lessee from any obligation incurred pursuant to this Lease prior to the date
of such termination.
(d) Termination of this Lease under this Section 1211 shall not relieve Lessee from
the obligation to pay any sum due to Agency or from any claim for damages against Lessee.
Damages which Agency may recover in the event of default under this Lease shall include, but
are not limited to, the worth at the time of award of the amount by which the unpaid rent for the
balance of the Lease term remaining after the time of award exceeds the amount of such rental
loss that Lessee proves could be reasonably avoided.
(e) The' right of termination provided by this Section 1211 is not exclusive and shall
be cumulative to all other rights and remedies possessed by Agency, and nothing contained
herein shall be construed so as to defeat any other rights or remedies to which Agency may be
entitled.
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H. [§ 1212] No Cross Defaults
Except as otherwise specifically set forth in this Lease, a breach or default by either Party
under any other agreement by which such Party or any affiliated or related person or entity of
such Party is bound as to a parcel of property other than the Site shall not constitute a breach or
default hereunder and, except as otherwise specifically set forth in this Lease, a breach or default
by either Party hereunder shall not constitute a breach or default by such Party or any affiliated
or related person or entity of such Party under any other agreement to which it or they may be
bound as to a parcel of property other than the Site.
XIII. [§ 1300] GENERAL PROVISIONS
A. [§ 1301 ] Notices, Demands and Communications between the Parties
Formal notices, demands, and communications between Agency and Lessee shall be
sufficiently given if dispatched by registered or certified mail, postage prepaid, return receipt
requested, to the principal offices of the Agency and of Lessee as designated in Section 108 and
Section 109 hereof. Such written notices, demands, and communications may be sent in the
same manner to such other addresses as either party may from time to time designate by mail as
provided in this Section. Sufficient notice may also be given by personal delivery or reputable
overnight delivery service in lieu of mail if reasonably adequate records are maintained of such
service in the ordinary course of business by the person or entity effecting such service.
B. [§ 1302] Time of Essence
Time is of the essence with respect to the performance of each of the covenants and
agreements contained in this Lease.
C. [§ 1303] Conflict of Interests
(a) No member, official or employee of Agency shall have any personal interest,
direct or indirect, in this Lease, nor shall any such member, official or employee participate in
any decision relating to the Lease which affects his personal interests or the interests of any
corporation, partnership, or association in which he is directly or indirectly interested.
(b) Lessee warrants that it has not paid or given, and will not pay or give, any officer
or employee of Agency or City any money or other consideration for obtaining this Lease.
D. [§ 1304] Nonliability of Agency Officials and Employees
No member, official, or employee of Agency shall be personally liable to Lessee, or any
successor in interest, in the event of any default or breach by Agency or any for any amount
which may become due to Lessee or successor or on any obligations under the terms of this
Lease.
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E. [§ 1305] Inspection of Books and Records
(a) Agency has the right at all reasonable times to inspect the books and records of
Lessee pertaining to the Site and Improvements as pertinent to the purposes of this Lease.
Lessee also has the right at all reasonable times to inspect the books and records of Agency
pertaining to the Site and Improvements as pertinent to the purposes of this Lease.
(b) In the event that the holder of a Mortgage obtained in accordance with Section
901 of this Lease acquires the leasehold estate created by this Lease, then, in such an event,
Agency acknowledges and agrees that Agency shall not be entitled to examine and/or audit all of
the books and records of said Mortgagee, but shall only be entitled to examine such books,
records and tax returns of the Mortgagee or portions thereof solely to the extent that they relate
to the Site and Improvements and the Mortgagee's operation thereof.
F. [§ 1306] No Partnership
Neither anything in this Lease contained, nor any acts of Agency or Lessee shall be
deemed or construed by any person to create the relationship of principal and agent, or of
partnership, or of joint venture, or of any association between Agency and Lessee.
G. [§ 1307] Compliance with Law
Except as otherwise expressly provided in the Development Agreement, Lessee agrees, at
its sole cost and expense, to comply and secure compliance with all the applicable and valid
requirements now in force, or which may hereafter be in force, of all municipal, county, State
and federal authorities pertaining to the Site and Improvements, as well as operations conducted
thereon, and to faithfully observe and secure compliance with, in the use of the Site and
Improvements, all applicable county and municipal ordinances and state and federal statutes now
in force or which may hereafter be in force, including all laws prohibiting discrimination or
segregation in the use, sale, lease, or occupancy of the Site.
H. [§ 1308] Surrender of Property
Except as otherwise expressly provided in this Lease, upon the expiration or termination
of this Lease pursuant to the terms hereof, it shall be lawful for Agency to reenter and repossess
the Site and Improvements without process of law, and Lessee, in such event, does hereby waive
any demand for possession thereof, and agrees to surrender and deliver the Site and
Improvements peaceably to Agency immediately upon such expiration or termination in good
order, condition and repair, except for reasonable wear and tear.
I. [§ 1309] Severability
If any provision of this Lease shall be adjudged invalid or unenforceable by a court of
competent jurisdiction, the remaining provisions of this Lease shall not be affected thereby and
shall be valid and enforceable to the fullest extent permitted by law.
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J. [§ 1310] Binding Effect
This Lease, and the terms, provisions, promises, covenants, and conditions hereof, shall
be binding upon and shall inure to the benefit of the Parties hereto and their respective heirs,
legal representatives, successors, and assigns. Not by way of limitation of the foregoing, if
Agency ceases to exist prior to the end of, the Term by operation of law or as a result of the
expiration or termination of the Redevelopment Plan applicable to the Site and the City becomes
the successor agency to Agency, all of Agency's right, title, and interest in and to the Site and
this Lease, and the terms, provisions, promises, covenants, and conditions hereof, shall be
binding upon and shall inure to the benefit of the City.
K. [§ 1311] Assignment or Sublease to City: Right of First Refusal
1. Agency shall at all times have the right to assign and/or convey all or a portion of
its interest in the Site and/or in the Lease to the City or, subject to Lessee's right of first refusal
set forth in Section 1311.2 of this Lease, to any other person or entity. In the event of any
assignment of all or a part of Agency's interest in either the Site or the Lease to City or other
person or entity, Lessee shall attorn to the City or such other person or entity and recognize the
City or such other person or entity as the landlord under this Lease, and the City or such other
person or entity shall not disturb Lessee's right to possess the Site and Improvements subject to
the provisions of this Lease. In addition, and not by way of limitation of the foregoing, upon the
dissolution or de -activation of Agency or the expiration of the effectiveness of the
Redevelopment Plan or the portion thereof in which the Site is located, whichever first occurs,
either (i) all of Agency's right, title, and interest in the Site and this Lease shall be assigned and
transferred to the City without the need for any further action of Agency or (ii) the City shall take
such reasonable steps as may be reasonably required under any applicable legislation to
implement and accomplish the purposes of this Lease.
2. Between the Agreement Date of this Lease and the expiration or termination of
this Lease, and so long as Lessee is not in default hereunder, Agency (including City, if City
succeeds to Agency's fee title to the Site) shall not sell, convey, transfer, or otherwise dispose of
all or any portion of or any interest in the Site to any third person or entity other than the City
(other than a pledge of any of its income under this Lease or other financing transaction) until it
shall first have offered such portion or interest to Lessee in the manner specified below:
(a) Agency shall deliver a notice (the "Notice") to Lessee of ( i) Agency's
bona fide intention to sell, transfer, or otherwise dispose of all or any portion of or any interest in
the Site, (ii) the portion or interest proposed to be sold, transferred or otherwise disposed of (the
"Offered Interest"), and (iii) the offering price and all other material terms for which Agency
proposes to sell, transfer, or otherwise dispose of the Offered Interest.
(b) Within sixty (60) days after receipt of the Notice, Lessee or its permitted
assignee may accept Agency's offer by delivering to Agency a writing agreeing to purchase the
Offered Interest on the terms offered by Agency. Any such acceptance of Agency's offer shall
be accompanied by a deposit equal to ten percent (10%) of the purchase price which deposit shall
be retained by Agency as liquidated damages in the event that the purchase is not completed due
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to a default by Lessee. If Lessee accepts Agency's offer to sell the Offered Interest the parties
shall consummate such purchase promptly in accordance therewith.
(c) If Lessee and Agency do not enter into an agreement to purchase/sell the
Offered Interest as set forth in subparagraph (b) above, or (ii) if Lessee and Agency enter into
such an agreement but Lessee fails to complete the purchase as set forth in subparagraph (b)
above, Agency may sell the Offered Interest to any person at any price and upon any terms, as
Agency shall determine, provided that the purchase price for the Offered Interest, and the terms
of the sale, shall be no more favorable to the purchaser than the terms of the Notice. For
purposes of comparing whether an offer by Lessee is more or less favorable than an offer by a
third party, any financed portion of the offered purchase price shall be discounted to present cash
value using the prime lending rate of Wells Fargo Bank or comparable financial institution. If
such sale is not consummated within two (2) years from the date of the Notice, Agency shall
again be obligated to first offer to sell the Offered Interest to Lessee as set forth in this Section.
L. [§ 1312] Captions
The captions contained in this Lease are merely a reference and are not to be used to
construe or limit the text.
M. [§ 1313] No Recording of this Lease
This Lease shall not be recorded. On the Agreement Date, the Parties shall cooperate in
causing an Amended Memorandum of Lease in the form set forth in Exhibit "E" attached hereto
to be recorded in the Official Records of Orange County.
N. [§ 1314] Enforced Delay in Performance for Causes Beyond Control of Party
In addition to specific provisions of this Lease, performance by either Party hereunder
shall not be deemed to be in default where delays or defaults are due to causes beyond the
control and without the fault of the Party claiming an extension of time to perform, including
war, insurrection; strikes; lockouts; riots; floods; earthquakes; fires; casualties; acts of God; acts
of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of
transportation; governmental restrictions or priority; litigation; unusually severe weather;
inability to secure necessary labor, materials, or tools; delays of any contractor or supplier, and
acts or failure to act of the City or any other public or governmental agency or entity (other than
any act or failure to act of Agency, which shall not excuse performance by Agency). An
extension of time for any such cause shall be for the period of the enforced delay and shall
commence to run from the time of the commencement of the cause. If, however, notice by the
Party claiming such extension is sent to the other Party more than thirty (30) days after the
commencement of the cause, the period shall commence to run only thirty (30) days prior to the
giving of such notice. Times of performance under this Lease may also be extended in writing
by Agency and Lessee.
O. [§ 1315] Entire Agreement Waivers and Amendments
(a) This Lease is executed in two (2) duplicate originals, each of which is deemed to
be an original. This Lease includes sixty-five (65) pages and three (3) exhibits.
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(b) All waivers of the provisions of this Lease must be in writing and signed by the
appropriate authorities of Agency or Lessee and all amendments hereto must be in writing and
signed by the appropriate authorities of the Agency and Lessee. During the term of any
Mortgage obtained in accordance with Section 901 of this Lease, any amendment to this Lease
shall require the written approval of the Mortgagee, which approval shall not unreasonably be
withheld.
P. [§ 1316] Off -set statement, Attornment and Subordination
1. Off -set Statement. The Parties shall, at any time and from time to time upon not
less than ten (10) days' prior written notice from the other Party, execute, acknowledge, and
deliver to such requesting Party a statement in writing (a) certifying that this Lease is unmodified
and in full force and effect (or, if modified, stating the nature of such modification and certifying
that this Lease, as so modified, is in full force and effect) and the dates to which the rent and
other charges are paid in advance, if any, without any offset or defense thereto (if such be the
case) and (b) acknowledging that there are not, to such certifying Party's knowledge, any
uncured defaults on the part of the requesting Party hereunder, or specifying the defaults if any
are claimed. Any such statement may be relied upon by any prospective purchaser or
encumbrancer of the Improvements, the Site, or of all or any portion of the real property of
which the Site are a part. Lessee shall bear all costs with respect to any statements requested of
Agency.
2. Attornment. In the event any proceedings are brought for the foreclosure of, or in
the event of the conveyance by deed in lieu of foreclosure, or in the event of exercise of the
power of sale under, any mortgage and/or deed of trust made by Agency covering the Site, or,
subject to Section 1311.2 of this Lease, in the event Agency sells, conveys, or otherwise transfers
its interest in the Site, Lessee hereby agrees to attorn to the new owner and covenants and agrees
to execute an instrument in writing reasonably satisfactory to the new owner whereby Lessee
attorns to the Agency's successor in interest and recognizes the successor as the Agency under
this Lease.
3. Subordination. Lessee agrees that this Lease shall, at the request of the Agency,
be subordinate to any mortgages or deeds of trust that may hereafter be placed upon the fee of
the Site by Agency and to any and all advances to be made thereunder, and to the interest
thereon, and all renewals, replacements and extensions thereof, provided that the mortgagees or
beneficiaries named in said mortgages or trust deeds shall execute and deliver a written non -
disturbance and attornment agreement by and among Lessee, Agency, and such mortgagees or
beneficiaries, in form reasonably satisfactory to Lessee and its counsel and the holder of any
Mortgage and their counsel, which shall provide the following assurances for the benefit of
Lessee and its permitted assignees, sublessees, successors and assigns:
(i) the leasehold estate granted by this Lease shall not be affected in any
manner by any foreclosure action, trustee's sale or other action taken or proceeding commenced
under or in connection with any mortgages or deeds of trust placed upon the fee of the Site by
Agency, or by any taking of possession of the Site pursuant thereto, or by the exercise of any
rights or remedies in connection therewith;
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(ii) if the interest of Lessor under this Lease is transferred in connection with
any foreclosure action, trustee's sale or other proceedings brought under any mortgages or deeds
of trust placed upon the fee of the Site by Agency (including, without limitation, any transfer by
deed in lieu of foreclosure), then, so long as Lessee is not in default in the performance of the
terms, covenants and conditions of this Lease beyond all applicable notice, grace, and Cure
Periods, the transferee of any such interest of Lessor (including, without limitation, the holder of
any such mortgage or deed of trust), together with its successors and assigns (collectively,
"Lessor's Transferee"), shall not terminate this Lease or interfere with or disturb Lessee in its
possession, use, occupancy or quiet enjoyment of the Site under this Lease for the remaining
Term of this Lease (as the same may be earlier terminated pursuant to any other Article of this
Lease), subject to all of the terms, covenants and conditions of this Lease;
(iii) Lessee shall not be named or joined in any foreclosure action, trustee's
sale or other proceeding to enforce any mortgages or deeds of trust placed upon the fee of the
Site by Agency; and
(iv) any Lessor's Transferee will accept the attornment of Lessee and will
assume and perform all of Lessor's obligations under the Lease for the benefit of Lessee and its
successors and assigns.
The foregoing written assurances shall, at Lessee's request, also be provided to any
permitted assignee or sublessee of Lessee under the Lease. Lessee also agrees that in the event
Agency and any mortgagee or beneficiary elect to have this Lease prior to such mortgage or deed
of trust, and upon notification by Agency or such mortgagee or beneficiary to Lessee to that
effect, this Lease shall be deemed prior in lien to such mortgage or deed of trust, whether this
Lease is dated prior to or subsequent to the date of said mortgage or deed of trust. Lessee agrees
that upon the request of Agency, or any mortgagee or beneficiary, Lessee shall execute whatever
instruments may be required to carry out the intent of this section.
[§ 1317] Approvals
Except as expressly provided otherwise in this Lease, approvals required of Agency or
Lessee shall not be unreasonably withheld, conditioned or delayed.
[1318] Counterparts
This Lease may be executed in counterparts and, when so executed, each such
counterpart will constitute an original document and such counterparts will constitute one and
the same agreement.
[The remainder of this page has been intentionally left blank. Signatures on next page.]
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Date:
ATTEST:
Agency Clerk
"AGENCY"
REDEVELOPMENT AGENCY OF THE
CITY OF HUNTINGTON BEACH, a public
body, corporate and politic
201_ By:
REVIEWED AND APPROVED
Executive Director
APPROVED AS TO FORM:
Agency Special Counsel
APPROVED AS TO FORM:
Agency General Counsel
INITIATED AND APPROVED
Director of Economic Development and
Deputy Executive Director
[signatures continued on next page]
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"LESSEE"
THE WATERFRONT HOTEL, LLC,
a California limited liability company
By: Waterfront Development, Inc.,
a California corporation, its Managing
Member
Date: , 201_ By:
Its: President
1121017963-0011
1094008.07 a04/18/11 -68-
EXHIBIT "A"
LEGAL DESCRIPTION OF THE SITE
That certain real land located in the City of Huntington Beach, County of Orange, State
of California, described as follows:
PARCELI:
LOT 1 OF TRACT NO. 13045, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF
ORANGE, STATE OF CALIFORNIA AS PER MAP RECORDED IN BOOK 628, PAGES 46
AND 47 OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER
OF SAID COUNTY.
PARCEL 2:
THAT PORTION OF THE NORTH HALF OF THE NORTHEAST QUARTER OF
SECTION 14, TOWNSHIP 6 SOUTH, RANGE 11 WEST, IN THE RANCHO LAS BOLSAS,
IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF
CALIFORNIA, AS PER MAP FILED IN BOOK 51, PAGE 14 OF MISCELLANEOUS MAPS,
IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS
FOLLOWS:
BEGINNING AT A POINT IN THE SOUTH LINE OF SAID NORTH HALF THAT IS
DISTANT THEREON NORTH 89043'07" EAST 103.28 FEET FROM CENTERLINE OF
HUNTINGTON STREET, AS SHOWN ON RECORD OF SURVEY NO. 81-1151, FILED IN
BOOK 103, PAGES 28 AND 29 OF RECORDS OF SURVEY IN THE OFFICE OF SAID
COUNTY RECORDER, SAID POINT BEING ON A NON -TANGENT 2355.00 FOOT
RADIUS CURVE THAT IS CONCAVE SOUTHWESTERLY, A RADIAL TO SAID POINT
BEARS NORTH 31056' 15" EAST; THENCE NORTHWESTERLY 5.94 FEET ALONG SAID
CURVE THROUGH A CENTRAL ANGLE OF 0008'40" TO THE BEGINNING OF A 32.00
FOOT RADIUS CURVE THAT IS CONCAVE SOUTHERLY; THENCE WESTERLY 41.11
FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 73036'25" TO SAID
SOUTH LINE; THENCE NORTH 89°43'07" EAST 43.24 FEET ALONG SAID SOUTH LINE
TO THE POINT OF BEGINNING.
PARCEL 3:
LOT I OF TRACT NO. 15535, AS SHOWN ON A MAP FILED IN BOOK 790 PAGES 44 TO
50 INCLUSIVE, OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY,
CALIFORNIA.
EXHIBIT "A"
TO AMENDED AND RESTATED
i12/017963-0011
1094008.07 a04/18/11 GROUND LEASE
i PARCEL 2
N 31 °47_35"fjR
I
/
A.
EXHIBIT "B"
MAP OF THE SITE
SLY LINE N M. NE SEC 14
I T. 6 S., R. 11 W., M.M. 51114
I
P.O.B.------1-----
� 66�
\ \ CO
0
d=00°0840"
R=2355.00'
L=5.94'
�2
8=73'3624"
R=32.00'
L=41.11'
O
N 89°43'07" E 43.24'
112/017963-0011
1094008.07 a04/18/11
EXHIBIT "B"
TO AMENDED AND RESTATED
GROUND LEASE
PY141RIT "( "'
DESCRIPTION OF THE CITY BEACH PROPERTY
That certain real land located in the City of Huntington Beach, county of Orange, State of
California, described as follows and depicted on page 2 of this Exhibit "C".
THAT PORTION OF FRACTIONAL SECTION 14, TOWNSHIP 6 SOUTH, RANGE 11
WEST, SAN BERNARDINO BASE AND MERIDIAN, IN RANCHO LAS BOLSAS, IN THE
CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS
PER MAP RECORDED IN BOOK 51, PAGE 14 OF MISCELLANEOUS MAPS, IN THE
OFFICE OF COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS:
COMMENCING AT THE MOST SOUTHEASTERLY TERMINUS OF THE
SOUTHEASTERLY RIGHT-OF-WAY LINE OF HUNTINGTON AVENUE, AS DESCRIBED
IN THAT CERTAIN AMENDMENT TO LEASE, RECORDED IN BOOK 5978, PAGE 910,
OFFICIAL RECORDS, (SAID RIGHT-OF-WAY LINE CITED IN SAID AMENDMENT TO
LEASE AS NORTH 37 DEGREES 54 MINUTES 51 SECONDS EAST 299.35 FEET);
THENCE SOUTHWESTERLY ALONG A PROLONGATION OF SAID RIGHT-OF-WAY
LINE TO THE POINT OF INTERSECTION WITH THE NORTHEASTERLY LINE OF
THAT STRIP OF LAND DESCRIBED IN THAT CERTAIN INDENTURE, RECORDED IN
BOOK 139, PAGE 9 OF DEEDS, RECORD OF SAID COUNTY, SAID POINT OF
INTERSECTION BEING THE TRUE POINT OF BEGINNING; THENCE CONTINUING
SOUTHWESTERLY ALONG SAID PROLONGATION OF SAID RIGHT-OF-WAY LINE TO
A POINT OF INTERSECTION WITH THE LINE OF ORDINARY HIGH TIDE OF THE
PACIFIC OCEAN; THENCE SOUTHEASTERLY ALONG SAID ORDINARY HIGH TIDE
LINE TO A POINT OF INTERSECTION WITH THE EASTERLY LINE OF SAID SECTION
14; THENCE NORTHERLY ALONG SAID EASTERLY LINE OF SAID SECTION 14 TO A
POINT OF INTERSECTION WITH THE SOUTHWESTERLY LINE OF A STRIP OF LAND
DESCRIBED IN THAT CERTAIN CORPORATION GRANT DEED, RECORDED IN BOOK
259, PAGE 213 OF DEEDS, RECORDS OF SAID COUNTY(SAID SOUTHWESTERLY
LINE CITED IN SAID DEED AS NORTH 53 DEGREES 06 MINUTES WEST 2579.28 FEET,
MORE OR LESS) ; THENCE NORTHWESTERLY ALONG SAID SOUTHWESTERLY LINE
TO THE MOST SOUTHERLY SOUTHEASTERLY CORNER OF A PIECE OF PARCEL OF
LAND DESCRIBED IN THAT CERTAIN INDENTURE, RECORDED IN BOOK 506, PAGE
448 OF OFFICIAL RECORDS; THENCE ALONG THE SOUTHERLY LINE THEREOF
NORTH 68 DEGREES 56 MINUTES WEST 193.98 FEET TO THE POINT OF
INTERSECTION WITH THE NORTHEASTERLY LINE OF THAT STRIP OF LAND
DESCRIBED IN THAT CERTAIN INDENTURE RECORDED IN BOOK 139, PAGE 9 OF
DEEDS, RECORDS OF SAID COUNTY; THENCE NORTHWESTERLY ALONG SAID
NORTHEASTERLY LINE TO THE TRUE POINT OF BEGINNING.
EXHIBIT "C"
TO AMENDED AND RESTATED
GROUND LEASE
112/017963-0011
1094008.07 a04/ 18/ 1 I -1-
a+a_isva a+
17/176 —` (1f✓ I&,WXV'*V*
_— I
r
112/017963-0011
1094008.07 a04/18/11
^0iWIN
hN<4
o�3s�
EXHIBIT "C"
TO AMENDED AND RESTATED
GROUND LEASE
-2-
EXHIBIT "D"
FIRST AMENDED MEMORANDUM OF LEASE
CONTAINING A RESTRICTIVE COVENANT
(To Be Inserted When the Developer has Satisfied the
Conditions to Closing on the Long -Terns Lease for Parcel C)
EXHIBIT "D"
TO AMENDED AND RESTATED
GROUND LEASE
F,XT41BIT "F."
AMENDED MEMORANDUM OF LEASE
(To Be Inserted When the Developer has Satisfied the
Conditions to Closing on the Long -Term Lease for Parcel C)
EXHIBIT "E"
TO AMENDED AND RESTATED
GROUND LEASE
FXHTRTT "F"
FORM OF RELEASE OF CONSTRUCTION COVENANTS
Recording Requested by and
When Recorded Return to:
THE WATERFRONT HOTEL, LLC
c/o The Robert Mayer Corporation
660 Newport Center Drive, Suite 1050
Newport Beach, CA 92660
Attn: Robert L. Mayer, Jr.
RELEASE OF CONSTRUCTION COVENANTS
WHEREAS, pursuant to that certain Amended and Restated Ground Lease (the "Lease")
entered into by and between the Redevelopment Agency of the City of Huntington Beach, a
public agency ("Agency"), and THE WATERFRONT HOTEL, LLC, a California limited
liability company ("Developer"), dated as of , 201_ (the "Lease"), Developer is the
lessee of certain real property situated in the City of Huntington Beach, County of Orange, State
of California, described in Exhibit A which is attached hereto and made a part hereof (the
"Site"), and has agreed to construct certain improvements thereon (as more particularly defined
in the Lease, the "Hotel Addition"); and
WHEREAS, pursuant to Section 410 of the Lease, Agency has agreed to furnish
Developer with this Release of Construction Covenants ("Release") upon the completion of
construction and development of the Hotel Addition; and
WHEREAS, the Lease states that this Release shall be a conclusive determination of
satisfactory completion of the construction and development of the Hotel Addition as required by
the Lease; and
WHEREAS, Agency has determined that the construction and development of the Hotel
Addition on the Site as required by the Lease has been satisfactorily completed;
NOW, THEREFORE, it is hereby acknowledged and agreed by the parties hereto that:
1. Agency does hereby certify that the construction and development of the Hotel
Addition on the Site has been fully and satisfactorily performed and completed as required by the
EXHIBIT "F"
TO AMENDED AND RESTATED
GROUND LEASE
112/017963-0011
1094008.07 a04/18/11 -1-
Lease and that Developer has fully complied with the terms of the Lease with respect to such
construction and development. Developer is authorized to cause this Release to be recorded
against the Site in the Official Records of the Orange County Recorder's office.
2. This Release shall not constitute evidence of compliance with or satisfaction of
any obligation of Lessee to any holder of a mortgage, or any insurer of a mortgage securing
money loaned to finance the Hotel Addition or any other Improvements on the Site or any
portion thereof. This Release is not a notice of completion as referred to in Section 3093 of the
California Civil Code. Except as expressly set forth herein, the Lease and all of the terms and
conditions set forth therein shall remain in full force and effect.
IN WITNESS WHEREOF, Agency has executed this Release this day of
201.
"AGENCY"
REDEVELOPMENT AGENCY OF THE
CITY OF HUNTINGTON BEACH, a public
body, corporate and politic
Date: , 201
ATTEST:
Agency Clerk
REVIEWED AND APPROVED
Executive Director
112/017963-0011
1094008.07 a04/18/11
APPROVED AS TO FORM:
Agency General Counsel
INITIATED AND APPROVED
Director of Economic Development and
Deputy Executive Director
EXHIBIT "F"
TO AMENDED AND RESTATED
GROUND LEASE
-2-
ON BEHALF OF THE WATERFRONT HOTEL, LLC, lessee of the Site described
herein, the undersigned hereby consents to the recordation of this Release of Construction
Covenants against the Site.
"DEVELOPER"
THE WATERFRONT HOTEL, LLC, a
California limited liability company
By: RLM Management, Inc., a California
corporation, its General Partner
in
Date: 1201 Its: President
EXHIBIT "F"
TO AMENDED AND RESTATED
GROUND LEASE
112/017963-0011
1094008.07 a04/18/11 -3-
EXHIBIT "A"
LEGAL DESCRIPTION OF THE SITE
That certain real land located in the City of Huntington Beach, County of Orange, State
of California, described as follows:
PARCEL 1:
LOT I OF TRACT NO. 13045, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF
ORANGE, STATE OF CALIFORNIA AS PER MAP RECORDED IN BOOK 628, PAGES 46
AND 47 OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER
OF SAID COUNTY.
PARCEL 2:
THAT PORTION OF THE NORTH HALF OF THE NORTHEAST QUARTER OF
SECTION 14, TOWNSHIP 6 SOUTH, RANGE 11 WEST, IN THE RANCHO LAS BOLSAS,
IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF
CALIFORNIA, AS PER MAP FILED IN BOOK 51, PAGE 14 OF MISCELLANEOUS MAPS,
IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS
FOLLOWS:
BEGINNING AT A POINT IN THE SOUTH LINE OF SAID NORTH HALF THAT IS
DISTANT THEREON NORTH 89043'07" EAST 103.28 FEET FROM CENTERLINE OF
HUNTINGTON STREET, AS SHOWN ON RECORD OF SURVEY NO. 81-1151, FILED IN
BOOK 103, PAGES 28 AND 29 OF RECORDS OF SURVEY IN THE OFFICE OF SAID
COUNTY RECORDER, SAID POINT BEING ON A NON -TANGENT 2355.00 FOOT
RADIUS CURVE THAT IS CONCAVE SOUTHWESTERLY, A RADIAL TO SAID POINT
BEARS NORTH 31 °56' 15" EAST; THENCE NORTHWESTERLY 5.94 FEET ALONG SAID
CURVE THROUGH A CENTRAL ANGLE OF 0008'40" TO THE BEGINNING OF A 32.00
FOOT RADIUS CURVE THAT IS CONCAVE SOUTHERLY; THENCE WESTERLY 41.11
FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 73036'25" TO SAID
SOUTH LINE; THENCE NORTH 89°43'07" EAST 43.24 FEET ALONG SAID SOUTH LINE
TO THE POINT OF BEGINNING.
PARCEL 3:
LOT 1 OF TRACT NO. 15535, AS SHOWN ON A MAP FILED IN BOOK 790 PAGES 44 TO
50 INCLUSIVE, OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY,
CALIFORNIA.
EXHIBIT "F"
TO AMENDED AND RESTATED
GROUND LEASE
112/017963-0011
1094008.07 a04/18/11 -4-
ATTACHMENT
#4-,,,,
SUMMARY REPORT PURSUANT TO
SECTION 33433
OF THE
CALIFORNIA HEALTH AND SAFETY CODE
ON AN
FIFTH IMPLEMENTATION AGREEMENT TO THE AMENDED AND RESTATED
DISPOSITION AND DEVELOPMENT AGREEMENT
BY AND BETWEEN
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH
AND
MAYER FINANCIAL, L.P., A CALIFORNIA LIMITED PARTNERSHIP
The following Summary Report has been prepared pursuant to the requirements imposed by
California Health and Safety Code Section 33433 (Section 33433). The report sets forth certain
details of the proposed Fifth Implementation Agreement to the Amended and Restated
Disposition and Development Agreement (Fifth Implementation Agreement) between the
Redevelopment Agency of the City of Huntington Beach (Agency) and Mayer Financial, L.P., A
California limited partnership (Developer). The purpose of the Fifth Implementation Agreement
is to effectuate the Redevelopment Plan for the Main -Pier Redevelopment Project Area
(Redevelopment Plan), which is now a subarea of the Merged Huntington Beach
Redevelopment Project Area (Project Area).
BACKGROUND STATEMENT
On April 28, 1989, the Agency and Waterfront Construction No. 1, a California limited
partnership entered into a ground lease for the development of a hotel and related
improvements (Existing Hilton) on property located at the corner of Pacific Coast Highway and
Huntington Street (Hilton Parcel). The Existing Hilton opened for business in 1990.
On September 14, 1998, the Agency entered into an Amended and Restated Disposition and
Development Agreement (Amended DDA) with the Developer for property located at the corner
of Pacific Coast Highway and Beach Boulevard (Mixed -Use Site). First and Second
Implementation Agreements were executed for the Mixed -Use Site in 2000 and 2001,
respectively. These three agreements called for the development of a resort hotel, the
construction of a residential component, and the development of a third hotel (Mixed -Use
Project). The 517 room Hyatt Regency Resort and Spa (Hyatt) opened for business in 2003,
and the Sea Colony and Sea Cove residential developments were completed in 2007 and 2009,
respectively. The third hotel has not yet been developed.
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The third hotel is proposed to be located on property known as "Parcel C", which is located
immediately adjacent to the Hilton Parcel. Parcel C is the only portion of the Mixed -Use Site
that has not been developed. On October 20, 2008 and October 18, 2010, Third and Fourth
Implementation Agreements were executed between the Agency and the Developer to extend
the Schedule of Performance for the development of Parcel C.
The currently proposed Fifth Implementation Agreement modifies the following terms of the
previously executed agreements:
1. On March 10, 2011, the Agency transferred the leased fee interest Parcel C and the
Hilton Parcel to the City of Huntington Beach (City). As such, the City is now the lessor
of the two properties. Any rights and responsibilities imposed on the Agency by the Fifth
Implementation Agreement also accrue to the City.
2. The existing agreements allow the Developer to obtain extensions to the Schedule of
Performance for the development of Parcel C. The Fifth Implementation Agreement
increases the number of extensions that can be obtained, and defines the payments that
the Developer must make for each extension.
3. The following "Parcel C Agreements" were executed by the Agency and the Developer
or entities controlled by the Developer. These Fifth Implementation Agreement provides
for these agreements to be modified if and when the leasehold interest in Parcel C is
conveyed to the Developer:
a. The "Interim Short -Term Lease" that was executed on April 14, 1999;
b. The "License Agreement to Provide Landscaping and other Improvements in the
Public Right of Way" that was executed on February 20, 2001.
C. The "Reciprocal Fire Lane Access Easement Agreement" dated August 30, 1995;
and
d. The "Waterfront Parking Easement Agreement" dated August 29, 2006.
4. Attachment No. 5 to the Amended DDA is a "Form of Lease". The Fifth Implementation
Agreement modifies the Form of Lease for the Hilton Parcel and Parcel C (Consolidated
Site).
The following Summary Report is based upon the information contained within the Fifth
Implementation Agreement, and is organized into the following seven sections:
Salient Points of the Fifth Implementation Agreement: This Section summarizes the
modifications to existing executed agreements that are proposed by the Fifth
Implementation Agreement. This section also outlines the major responsibilities
imposed on the Developer and the Agency by the Fifth Implementation Agreement.
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II. Cost of the Fifth Implementation Agreement to the Agency: This section details the total
cost to the Agency associated with implementing the Fifth Implementation Agreement.
III. Estimated Value of the Interests to be Conveyed Determined at the Highest Use
Permitted under the Redevelopment Plan: This section estimates the leasehold value of
the Consolidated Site determined at the highest use permitted under the Redevelopment
Plan based on the assumption that near -term development is required.
IV. Estimated Reuse Value of the Interests to be Conveyed: This section summarizes the
estimated leasehold value for the Consolidated Site based on the required scope of
development, and the other conditions and covenants required by the Fifth
Implementation Agreement.
V. Consideration Received and Comparison with the Established Value: This section
describes the compensation to be received by the Agency, and explains any difference
between the compensation to be received and the established leasehold value of the
Consolidated Site.
VI. Blight Elimination: This section explains how the Fifth Implementation Agreement will
assist in alleviating blight in the Project Area.
VII. Conformance with the AB 1290 Implementation Plan: This section describes how the
Fifth Implementation Agreement achieves goals identified in the Agency's adopted AB
1290 Implementation Plan.
This report and the Fifth Implementation Agreement are to be made available for public
inspection prior to the approval of the Fifth Implementation Agreement.
I. SALIENT POINTS OF THE FIFTH IMPLEMENTATION AGREEMENT
Extensions to the Schedule of Performance
In the Fourth Implementation Agreement, the Agency and the Developer agreed that the
conditions precedent to the conveyance of the leasehold interest in Parcel C must be fulfilled
prior to June 30, 2011 unless the Developer elects to purchase an extension or extensions. The
Fifth Implementation Agreement provides the Developer with the right to purchase subsequent
extensions based on the following parameters:
To apply for an extension, the Developer must be in compliance with the terms of all
agreements applicable to Parcel C. The Fifth Implementation Agreement establishes
the actions the Agency must take to declare the Developer in default, and provides the
Developer with a cure period for any default declared by the Agency.
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2. The following extensions may be requested by the Developer as long as the default
criteria as been met:
a. Second Extension: June 30, 2011 through December 31, 2011
b. Third Extension: January 1, 2012 through December 31, 2012
C. Fourth Extension: January 1, 2013 through December 31, 2013
d. Fifth Extension: January 1, 2014 through December 31, 2014
e. Sixth Extension: January 1, 2015 through December 31, 2015
3. The Developer may also request a Seventh Extension for the period between January 1,
2016 and December 31, 2016 if the following actions have been completed:
a. The Developer must have fulfilled all the conditions precedent to the conveyance
of Parcel C except the submission of evidence of financing, the insurance
requirements, and the execution of the lease for Parcel C.
b. The Developer must demonstrate diligent and good faith efforts to obtain
financing for the project. The Developer must also provide information from
lenders or third party experts in the hotel financing industry that financing is not
available, or that additional time is required to complete a financing transaction.
C. The Developer must provide information from lenders or third party experts in the
hotel financing industry that financing is likely to become available, or that a
proposed financing transaction can be completed by December 31, 2016.
4. The Developer must make a $250,000 payment to the City for each extension being
requested. The extension payments will be reduced by the following amounts:
a. The Developer is entitled to receive a partial credit against the extension fee for
approved third -party expenditures directly related to the construction of the third
hotel. The applicable timing for the expenditures that will qualify as a partial
credit against the extension fee is:
Second and Third Extensions: January 1, 2009 through the close of
escrow for the Parcel C ground lease;
Fourth Extension: January 1, 2010 through the close of escrow for the
Parcel C ground lease;
The Developer exercised the First Extension prior to the proposed Fifth Implementation Agreement.
The Developer is requesting the Second Extension as part of the Fifth Implementation Agreement.
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iii. Fifth through Seventh Extensions: July 1, 2011 through the close of
escrow for the Parcel C ground lease.
b. If Parcel C is conveyed to the Developer during one of the extension periods, the
Developer is entitled to a partial repayment of that extension payment. The
repayment amount is equal to the pro rata monthly share of the annual payment
after deduction of the reimbursement the Developer received for eligible
expenditures during that extension period.
Amended and Restated Ground Lease
Proposed Scope of Development
The previously executed agreements allow the Developer to either construct a third hotel or to
expand the Existing Hilton. Under the terms of the Fifth Implementation Agreement, the
Developer has opted to expand the Existing Hilton. The "Hotel Addition" is proposed to include
the following components:
Approximately 151 net new guestrooms, that must include a minimum of 125 suites;
2. Meeting space;
3. A health spa, fitness facility and swimming pool;
4. Restaurants and poolside food and beverage facilities;
5. Ancillary retail facilities;
6. A semi -subterranean parking garage; and
7. A secondary porte-cochere entry.
The "Expanded Hilton" is anticipated to include a total of approximately 441 guestrooms The
construction of the Expanded Hilton may reduce the number of guestrooms in the 290-room
Existing Hilton. However, the lost guestrooms may be replaced in the Hotel Addition. As a
result, the Hotel Addition is expected to include approximately 151 net new guestrooms. The
actual number of net new guestrooms constructed in the Hotel Addition may vary from this
estimate, but in any case, a minimum of 125 suites must be constructed.
Modifications to Agreement Terms
If and when the Developer fulfills the conditions precedent to the conveyance of the leasehold
interest in Parcel C, the Amended and Restated Ground Lease, that is included as Exhibit No.
to the Fifth Implementation Agreement, will go into effect (Amended and Restated Ground
Lease). In the Amended and Restated Ground Lease, the Hilton Parcel and Parcel C are
consolidated into one site (Consolidated Site).
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The key components of the Amended and Restated Ground Lease can be summarized as
follows:
Existing Parcel C Agreements:
The interim lease for Parcel C will terminate.
2. The remaining Parcel C easements will be terminate and the landscaping license
agreements will be reassigned under the terms of the Amended and Restated Ground
Lease.
Ground Lease Terms:
The executed ground lease for the Hilton Parcel will terminate upon the conveyance of
leasehold interest in Parcel C to the Developer. The ground lease payment schedule for the
Hilton Parcel will be replaced by the schedule included in the Amended and Restated Ground
Lease. The ground lease term for the Consolidated Site will be set at 99 years.
Adjustment Factor
The ground lease payment schedule included in the Amended and Restated Ground Lease,
includes "Base Rent" and "Participation Rent". Both the Base Rent and the Participation Rent
are based on the terms applied to the Hyatt ground lease multiplied times an "Adjustment
Factor". The Adjustment Factor is intended to reflect development timing and operational
differences between the Expanded Hilton and the Hyatt. The Adjustment Factor, is calculated
when the Amended and Restated Ground Lease is executed, and it includes the following three
factors:
The inflation that has occurred since April 2001 and the execution of the Amended and
Restated Ground Lease, as measured by changes in the Consumer Price Index for all
urban consumers (CPI);
2. The total number of guestrooms located in the Expanded Hilton divided by the 517
guestrooms located in the Hyatt; and
3. The effective room sales revenue generated per room (RevPAR) at the Existing Hilton
versus the RevPAR generated at the Hyatt. This adjustment will be measured for the
three-year period preceding the date on which the Amended and Restated Ground
Lease is executed.
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An illustrative example of the Adjustment Factor follows:
1. The CPI in April 2001 equaled 176.60, and the CPI in March 2011 equaled 232.241.2
The adjustment equals 232.241 - 176.60 = 1.315.
2. The Expanded Hilton is projected to include 441 rooms, and the Hyatt includes 517
rooms. The adjustment equals 441 = 517 = .8529.
3. The RevPAR at the Existing Hilton is approximately 23% lower than the RevPAR at the
Hyatt. Under this assumption, the adjustment would equal .77.
The Adjustment Factor derived under the preceding illustrative example equals:
1.315 x .8529 x .77 = .8636
Base Rent
The Base Rent schedule is presented in the following table. The adjusted Base Rent is shown
for illustrative purposes only. The actual amount of the Adjustment Factor will not be known
until the Amended and Restated Ground Lease is executed.
Illustrative
Illustrative
Adjustment
Adjusted
Base Rent
Factor
Base Rent
Construction Period
$25,000
.8636
$21,590
First Operating Year
$25,000
.8636
$21,590
Second Operating Year
$75,000
.8636
$64,770
Third Operating Year
$150,000
.8636
$129,540
From the Fourth Operating Year forward, the Base Rent will increase by the change in the CPI
for the 12 months preceding the adjustment date. However, the increase can never exceed 5%
for any single year, and a cumulative total of 20% for any five-year period.
Participation Rent
The Amended and Restated Ground Lease includes Participation Rent that is paid in addition to
the Base Rent. The Participation Rent formula commences in the Third Operating Year, and it
is triggered any year in which the "Gross Room Revenue" generated by the Expanded Hilton
exceeds a defined "Threshold Amount". The Participation Rent terms can be described as
follows:
2 March 2011 is the latest published CPI estimate. The actual adjustment date could be as late as
December 2016.
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1. Gross Room Revenue is defined as the revenue received from the rental of guestrooms
and suites, excluding any fees charged for food, beverage, mini -bar, health club,
parking, telephone and equipment rents.
2. The Threshold Amount is calculated as follows:
a. The Participation Rent formula is applied for the first time in the Third Operating
Year. In the Third Operating Year, the Threshold Amount is set at $25 million
multiplied times the Adjustment Factor. For example, if the illustrative
Adjustment Factor is applied, the Threshold Amount equals $21.59 million ($25
million x .8636).
b. Each year from the Fourth Operating Year through the end of the Amended and
Restated Ground Lease term, the Threshold Amount is increased annually based
on the change in the CPI for the preceding calendar year. However, the increase
is capped at 5% each year, and a cumulative cap of 20% is applied for any five-
year period.
3. The difference between the Gross Room Revenue and the Threshold Amount is defined
as the "Adjusted Room Revenue".
4. Participation Rent is equal to the Adjusted Room Revenue multiplied times 3%.
An illustrative Participation Rent calculation for the Third Operating Year is provided below.3
However, it is important to note that the actual amount of the Adjustment Factor will not be
known until the Amended and Restated Ground Lease is executed, and the remaining
components in the formula will vary annually based on the Participation Rent formula defined in
the Amended and Restated Ground Lease.
Third Operating Year
Illustrative Participation Rent Calculations
Gross Room Revenue $29,000,000
Threshold Amount 21,590,000
Adjusted Room Revenue $7,410,000
Participation Rent Percentage 3%
Participation Rent $222,300
3 The variables used in the illustrative example are based on assumptions applied in a report prepared for
the Developer by Parsons Brinckerhoff on December 7, 2010.
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April 27, 2011
Developer Responsibilities
The Fifth Implementation Agreement requires the Developer to accept the following
responsibilities:
1. The scope of development for the Hotel Addition must conform to Conditional Use
Permit No. 09-037. Any modifications to the development scope must be approved by
the City.
2. Construction of the Hotel Addition must commence within 60 days following the
execution of the Amended and Restated Ground Lease, and be completed within a 24-
month period.
3. The Developer must obtain Agency approval for any mortgage that is secured by the
leasehold interest in the Consolidated Site. Allowable mortgages must meet the
following criteria:
a. The mortgage cannot encumber the Agency's fee interest in the Consolidated
Site in any way;
b. The mortgage must be obtained from an institutional lender;
C. The mortgage must be subject to all the covenants, conditions, and restrictions
imposed by the Amended and Restated Ground Lease;
d. A written request must be recorded in the Official Records of Orange County for
the Agency to be provided with copies of all notices of default and sale under the
mortgage.
4. The Developer may not make any transfer of the Amended and Restated Ground Lease
without the written consent of the Agency.
5. Throughout the 99-year ground lease term, the Developer must fulfill the following
operational requirements:
a. The Expanded Hilton must be continually operated as a first-class hotel.
b. The Developer must maintain the Consolidated Site in a first-class condition, as
described in the Amended and Restated Ground Lease.
C. The Developer may not remove any of the Expanded Hotel improvements from
the Consolidated Site, except as permitted by the Amended and Restated
Ground Lease. The improvements on the Consolidated Site will become the
property of the Agency at the termination of the Amended and Restated Ground
Lease.
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Item 11. - 123
6. As part of the Fifth Implementation Agreement, the Agency is required to approve the
management company and franchisor/licensor of the Expanded Hotel. If the Developer
wishes to replace the management company and/or the franchisor/licensor with a party
that is not affiliated with the approved entities, the proposed agreement must first be
submitted to the Agency for approval.
7. The Developer must make payments to the Agency in return for the Agency accepting
restrictions on the use of the City Beach Property. a The payments are set at $1,666 per
year through 2013. Beginning in 2014, the payment amount will increase by the change
in the CPI annually until the termination of the Amended and Restated Ground Lease.
8. The Developer must pay all utilities costs, taxes, assessments and other charges
incurred on the Consolidated Site during the term of the Amended and Restated Ground
Lease.
9. The Fifth Implementation Agreement imposes limits on the ability of the Developer to
appeal the property tax assessment applied to the Consolidated Site after the Hotel
Addition is completed. Specifically, the Developer may not contest any assessment that
will result in a value that is less than the sum of $30 million plus the assessed value of
Hilton Parcel during the last fiscal year prior to the execution of the Amended and
Restated Ground Lease.
Agency Responsibilities
The Fifth Implementation Agreement imposes the following responsibilities on the Agency:
Approval of the Management Company:
a. As part of the Amended and Restated Ground Lease, the Agency approves the
Mayer Hospitality Group LLC as the management company for the Expanded
Hotel.
b. If the Developer requests approval to replace the management company with an
entity that is not affiliated with Waterfront Resorts, LLC, the Agency must
approve the transfer if the replacement firm has at least eight years of experience
in the successful operation of first -quality hotels.
2. Approval of the Hotel Franchise or License Agreement:
a. As part of the Amended and Restated Ground Lease, the Agency approves
Hilton Franchise, LLC as the franchisor/licensor the Expanded Hotel.
4 The "City Beach Property" is owned by the City, and bounded by Pacific Coast Highway, Huntington
Beach State Park, the high tide line of the Pacific Ocean, and an imaginary line extending from the
intersection of Pacific Coast Highway and Huntington Street.
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b. If the Developer wishes to replace the franchisor or licensor, the Agency must
approve the assignment if the franchisor/licensor meets the criteria established in
the Amended and Restated Ground Lease for a first -quality hotel.
3. The City Beach Property is subject to a Development Agreement that was previously
executed by the City and the Developer. The Development Agreement imposes
restrictions on the use of the City Beach Property that run for the life of the ground lease
term for the Mixed -Use Site. The restrictions are incorporated into the Amended and
Restated Ground Lease, and are summarized here for purposes of clarity:
a. The only structures the Agency may allow to be constructed on the City Beach
Property are access facilities; restroom facilities; health and safety facilities; park
offices; surface parking lots and transit facilities; beach concession stands; sports
courts and playground equipment; trails and support facilities; and fire rings.
b. The Agency must cause the City to maintain and operate public beach parking
with at least the same number of spaces as were agreed to in the 1998
Development Agreement for the City Beach Property.
C. The Agency must obtain the Developer's consent to allow for camping; overnight
parking for recreational vehicles; or the sale, or exhibition for the purpose of sale,
of motor vehicles or watercraft on the City Beach Property.
d. The Agency must give the Developer 60 days notice before a permit can be
issued for events that generate significant noise; sales or rental of products or
services outside of the beach concession stands; events that are not free and
open to the general public, or which do not involve entertainment, sports or
recreational activities; events that restrict access to a pedestrian crossing over
Pacific Coast Highway; events that occupy more than 33% of the City Beach
Property; events that occur in excess of five consecutive days or more than 30
days in a year; or uses that impede the view of the ocean or sand from the
Consolidated Site and the Expanded Hotel.
4. The Agency must agree to a Developer request to transfer the Amended and Restated
Ground Lease and the Expanded Hilton if the following conditions are met:
a. The Developer is not in default on any of the Amended and Restated Ground
Lease terms; and
b. The proposed transferee meets the following requirements:
Demonstrated ability to fulfill the Amended and Restated Ground Lease
terms;
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Acknowledgment in writing of the obligations imposed by Amended and
Restated Ground Lease;
iii. A net worth equal to at least $50 million if the transfer occurs prior to the
completion of Hilton Expansion, or other evidence satisfactory to the
Agency if the transfer occurs after construction is completed; and
iv. Demonstrated experience in operating and managing a hotel of a type
and character similar to the Expanded Hilton.
COST OF THE FIFTH IMPLEMENTATION AGREEMENT TO THE AGENCY
The Agency costs associated with implementing the development of a hotel on Parcel C were
identified in the Section 33433 Report that was prepared in 1998 in support of the Amended
DDA. The Fifth Implementation Agreement does not require the Agency to incur any additional
costs, and it does not provide any financial assistance to the development of the Expanded
Hilton.
III. ESTIMATED VALUE OF THE INTERESTS TO BE CONVEYED DETERMINED AT
THE HIGHEST USE PERMITTED UNDER THE REDEVELOPMENT PLAN
Section 33433 requires the Agency to identify the value of the interests being conveyed at the
highest use allowed by the requirements imposed by the Redevelopment Plan. The valuation
must be based on the assumption that near -term development is required, but the valuation
does not take into consideration any extraordinary use or quality restrictions that are being
imposed on the development by the Agency.
The Consolidated Site is subject to the requirements imposed by the Huntington Beach
Downtown Specific Plan (Downtown Specific Plan). The pertinent requirements under the
Specific Plan are:
In November 2009, the Consolidated Site was placed in District 3 of the Downtown
Specific Plan. The development standards for District 3 require visitor serving uses,
including hotels.
2. The Downtown Specific Plan requires a master site plan to be implemented for
development in the various districts. The master plan that covers the Consolidated Site
was adopted in 1998. This master plan includes the Existing Hilton, and it requires
Parcel C to be developed with a first -quality hotel with a maximum of 300 guestrooms or
150 guestrooms in an all -suites hotel.
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11 nncc nnc 006 April 27, 2011
Item 11. - 126 H -340-
In a report dated April 15, 2011, PKF Consulting established the fair market rental value for the
Consolidated Site given the applicable Downtown Specific Plan requirements.5 The PKF
consulting valuation analysis concluded that the proposed ground lease payment structure and
schedule imposed by the Amended and Restated Ground Lease represents the fair market
rental rate for the Consolidated Site.
IV. ESTIMATED REUSE VALUE OF THE INTERESTS TO BE CONVEYED
The proposed hotel development comports with the requirements imposed by the Downtown
Specific Plan. As such, the fair reuse value is the same as the value of the Site at the highest
use permitted by the Redevelopment Plan. Thus, the fair reuse value is equal to the ground
lease payment structure and schedule imposed by the Amended and Restated Ground Lease.
V. CONSIDERATION RECEIVED AND COMPARISON WITH THE ESTABLISHED
VALUE
The Fifth Implementation Agreement requires the Developer to make ground lease payments in
accordance with the Amended and Restated Ground Lease terms. These lease terms are
equal to the established fair market rental rate for the Consolidated Site. Therefore, it can be
concluded that the Agency is receiving fair compensation for the interests being conveyed.
VI. BLIGHT ELIMINATION
The Section 33433 Report prepared in 1998 in support of the Amended DDA described the
ways in which the proposed Mixed -Use Project would alleviate blighting conditions in the Main -
Pier Project Areas. The construction of the Hotel Addition on Parcel C is the final phase of the
Mixed -Use Project development. Upon its completion, the blight elimination activities
anticipated to be completed by the implementation of the Amended DDA will be completed.
VII. CONFORMANCE WITH THE AB 1290 IMPLEMENTATION PLAN
The Agency's adopted AB 1290 Implementation Plan identifies the completion of the Waterfront
mixed -use development as an priority objective. It is anticipated that this project will achieve the
Agency's goal to enhance the community's economic base by encouraging investment in the
Project Area. Specifically, the Expanded Hilton is expected to provide new property tax
increment to the Agency, and additional transient occupancy taxes, sales taxes, business
license taxes and utility user's tax revenues to the City. As such, the Expanded Hilton conforms
to the goals and objectives set forth in the AB 1290 Implementation Plan.
5 The valuation analysis was prepared by a California General Certified Appraiser, and is attached to this
Section 33433 report for reference purposes.
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Item 11. - 127
Fifth Implementation Agreement
t0 the Amended and Restated DDA
May 16, 2011
Background
i
- -----
•The ground lease for the Existing Hilton was
- - executed in 1989, and the hotel opened in
1990.
• An Amended DDA was executed for the rest of
the Waterfront site (Mixed -Use Site) in 1998.
Implementation Agreements were executed in
2000 and 2001.
May 16, 2011
Keyser Marston Associates, Inc.
Page 2
E
Background
__ == • The Mixed -Use Site includes:
• The 517 room Hyatt Regency Resort & Spa opened in
2003. This parcel is ground leased to the Developer.
• Sea Colony & Sea Cove residential were completed in
2007 and 2009. These parcels were sold to the
_- Developer.
- The Third Hotel will be developed on Parcel C. In 2008
and 2010, Agreements were executed to extend the
Schedule of Performance for this hotel.
- May 16, 2011 Keyser Marston Associates, Inc. Page 3
_-- Allows for extensions to the Schedule of
Performance through December 2015 by right,
and 2016 if specific requirements are met.
Extension payments are set at $250,000 per
extension with offsets for defined and
approved third -party expenditures.
May 16, 2011 Keyser Marston Associates, Inc. Page 4
Fifth Amendment Terms
i
• Parcel C Agreements are modified when the
Parcel C lease goes into effect.
. Interim lease and easements for Parcel C
terminate.
- .Landscaping license agreement is reassigned.
Ground lease changes go into effect six
months before the beginning of construction on
the Third Hotel.
May 16, 2011 Keyser Marston Associates, Inc. Page 5
Scope of Development
•The Third Hotel will be an addition to the
-- Existing Hilton.
•The Hotel Addition will include approximately
151 rooms, and must include at least 125
suites.
• The expanded Hilton will include approximately
441 rooms and suites.
May 16, 2011 Keyser Marston Associates, Inc. Page 6
Ground Lease Modifications
The ground lease combines Existing Hilton
and Parcel C into a single ground lease.
• The ground lease term is set at 99 years.
• The ground rent includes both Base Rent and
Participation Rent. No Participation Rent is
included in the lease that is currently in place
for the Existing Hilton.
May 16, 2011 Keyser Marston Associates, Inc. Page 7
Ground Lease Modifications
-- _ Base Rent and Participation Rent are based
on the Hyatt lease terms as adjusted to reflect:
.Inflation since 2001
. Number of hotel rooms in the Expanded Hilton as
compared to the number of rooms in the Hyatt
= Revenue per room for the Existing Hilton vs the
Hyatt
May 16, 2011 Keyser Marston Associates, Inc. Page 8
rSample Rent Calculations
_ _ , w_3 ':..._s ,L a l_,,.3 s.v . a _I ,sue ^a .✓ ,
Construction + Yr1 $217590
Year 2 $641770
Year 3 $129,540
Year 5 $1371430
Yea r 10 $159,7320
Year 20 $2147110
CO)
J�v-lnoc't
i
rL
NA
'$21,590
NA
$641770
$2221,3001
$351,1840
$2357840
$3737270
$273 1`400
$4.32172"0'
$3671430
$5811540
May 16, 2011 Keyser Marston Associates, Inc. Page 9
Key Developer
Responsibilities
• The ground lease defines the quality level and
amenities required for the Expanded Hotel.
• Construction must commence within 60 days
after the lease term starts,, and be completed
within 24 months.
* The Developer must receive Agency approval
for the project's financing.
May 16, 2011 Keyser Marston Associates, Inc. Page 10
Key Developer
Responsibilities
� The Developer must obtain Agency approval
for the hotel management company and
franchise. Hilton is apre-approved franchise.
* The Developer cannot transfer the ground
lease without Agency approval.
• No property tax appeal is allowed below an
established base level.
May 16, 2011 Keyser Marston Associates, Inc. Page 11
Cost of the Fifth Amendmenll
to the Agency
• The Fifth Amendment does not require the
Agency to incur any additional costs.
May 16, 2011 Keyser Marston Associates, Inc. Page 12
NOTICE OF JOINT PUBLIC HEARING BEFORE THE CITY
COUNCIL/REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON
BEACH
NOTICE IS HEREBY GIVEN that the City Council of the City of Huntington Beach,
California (the "City") and the Redevelopment Agency of the City of Huntington Beach (the
"Agency") will hold a joint public hearing on May 16, 2011 at the hour of 6:00 p.m., or as
soon thereafter as the matter can be heard, at City Hall, 2000 Main Street, Huntington
Beach, California, pursuant to the California Community Redevelopment Law (Health and
Safety Code Sections 33000 et seq.) for the purpose of considering the approval of a
proposed Fifth Implementation Agreement to Amended and Restated Disposition and
Development Agreement (the "Agreement') by and among the Redevelopment Agency of
the City of Huntington Beach, the City of Huntington Beach, and Mayer Financial, L.P.
including a form of lease by and between the Agency and the Waterfront Hotel, LLC. The
real property to be leased is within the Merged Redevelopment Project Area of the City of
Huntington Beach (the "Project Area").
A summary report has been prepared in connection with the Agreement and lease
which describes and specifies the following: the cost of the Agreement; the estimated value
of the interests to be leased, determined (i) at the highest and best uses permitted under
the Redevelopment Plan for the Project Area, and (ii) with the conditions, covenants, and
development costs required by the lease; the rental value for the real property; and an
explanation of why the lease will assist in the elimination of blight.
The following Environmental Impact Reports and Addenda have previously been
prepared and certified (as applicable) (collectively, the "Environmental Documents"): a
Final Environmental Impact Report for the Project Area; the Final Environmental Impact
Report 82-2 for the Downtown Specific Plan, which was supplemented by a Supplemental
Environmental Impact Report (SEIR 82-2) and addended by an Addendum to SEIR 82-2
prepared in 1998; the Final Environmental Impact Report 89-6 and the Addendum with a
Statement of Overriding Considerations for the Main -Pier Phase Two Project Area; the
Final Environmental Impact Report No. 94-1 for the City of Huntington Beach General Plan;
the Final Environmental Impact Report No. 96-2 for the merger of Redevelopment
Plans/Projects within the City of Huntington Beach; Pacific City EIR No. 02-01; the
Newland Street Residential Project EIR No. 2005-01, and the Beach and Edinger Corridors
Specific Plan EIR No. 08-008. Neither the Agreement nor the lease change in anyway the
development or land use controls of the project, including without limitation the height,
density or intensity of the project. The proposed Agreement and lease of property are
included within the scope of the Environmental Documents in that all of the potential
environmental impacts of the proposed Agreement and lease of property are addressed in
the Environmental Documents and, therefore, no further environmental review or
documents are required in connection with the proposed Agreement and lease of property.
At the above stated day, hour and place, any and all persons having objections to or
wishing to express support of the proposed Agreement, the proposed lease of real property
or the proposed terms and conditions therefor, or the regularity of any proceedings, may
appear and be heard before the Agency and the City Council. At any time not later than
the hour set for joint public hearing, any person objecting to or supporting the proposed
Agreement, the proposed lease of real property or the terms and conditions therefor, may
file in writing with the Agency or City a statement of his or her objections thereto or support
thereof. Persons who challenge approval of the proposed Agreement (including the form
of lease attached thereto) or the regularity of any proceedings in court may be limited to
raising only those issues they or someone else raised at the joint public hearing described
in this Notice, or raised in written correspondence delivered to the City or Agency at, or
prior to, the joint public hearing.
The summary report and Agreement (including the form of lease attached thereto)
are available for public inspection and copying during regular office hours at the offices of
the City Clerk at, 2000 Main Street, Huntington Beach, California. If there are any further
questions, please contact Kellee Fritzal, Deputy Economic Development Director at (714)
374-1519.
Joan L. Flynn, City Clerk
City of Huntington Beach
2000 Main Street, 2"d Floor
Huntington Beach, California 92648
(714) 536-5227
Esparza, Pa
From:
Fritzal, Kellee
Sent:
Monday, April 25, 2011 10:31 AM
To:
Esparza, Patty
Subject:
Re: JPH notice
/We would only sign IF we convey property and that may be 5 years.
From: Esparza, Patty
Sent: Monday, April 25, 2011 10:28 AM
To: Fritzal, Kellee
Subject: RE: JPH notice
Hi Kellee — Thanks for the documents. I have a couple of questions:' Exhibit No. 1 titled "Attachment
No. 5 to. Amended and Restated Disposition and Development Agreement, Form of Lease - will I be
executing that document in addition to the Fifth Implementation Agreement? If so, when? There are
many blanks that need to be filled in that I don't have the dates on and there are no signatures at all
on Exhibit No. 1. Also, did you want me to scan & attach the agreement into SIRE? Thanks, Patty
From: Fritzal, Kellee
Sent: Monday, April 25, 2011 8:39 AM
To: Esparza, Patty
Subject: RE: JPH notice
Patty the Fifth Implementation Agreement and Lease are with Joan (3 original signatures- fully signed). I will have the
33433 report today and put together a binder for both the Clerk's office and Economic Development.
From: Esparza, Patty
Sent: Thursday, April 21, 2011 12:15 PM
To: Fritzal, Kellee; Flynn, Joan
Cc: Lugar, Robin
Subject: RE: JPH notice
Hi Kellee — I have a couple of questions regarding this legal ad. According to the notice I received
through AgendaPlus workflow, it needs to be advertised 2 times. Is that correct? If so, do you also
want it advertised the following week (May 5)? Also, since the notice states we will have the
Agreement including the.form of lease, I want to verify that those documents will be delivered to our
office no later than Wednesday, April 27t" for public inspection. Thanks!
From: Fritzal, Kellee
Sent: Thursday, April 21, 2011 9:23 AM
To: Esparza, Patty; Flynn, Joan
Subject: JPH notice
This is the notice, can we have printed next week
Esparza, Patty
From: Fritzal, Kellee
Sent: Thursday, May 05, 2011 9:01 AM
To: Flynn, Joan; Esparza, Patty
Subject: FW: Fifth Implementation Agreement
/We will not have the Exhibits as attachments at this times
From: Murray 0. Kane [mailto:mkane@kbblaw.com]
Sent: Thursday, May 05, 2011 8:58 AM
To: Fritzal, Kellee
Subject: Re: Fifth Implementation Agreement
,//Kellee I am ok with not having these documents now. The lease attachment is a form so that is all right. So it's
your call.
Murray Kane
On May 5, 2011, at 7:52 AM, "Fritzal, Kellee" <KFritzal(a�surfcity�hb.org> wrote:
Don't want executed. I asked about drafts for a complete document
From: Oderman, Jeff [mailto:joderman@rutan.com]
Sent: Thursday, May 05, 2011 07:42 AM
To: Shawn Millbern <skm@mayercorp.com>; Fritzal, Kellee
Cc: mkane@kbblaw.com <mkane@kbblaw.com>
Subject: RE: Fifth Implementation Agreement
I concur with Shawn. Exhibits D and E to the Amended and Restated Lease do not get executed
and recorded until the Developer has satisfied the conditions to closing on the long-term lease for
Parcel C, which may be years from -now. It is not appropriate to have those documents executed
now.
From: Shawn Millbern [mailto:skm@mayercorp.com]
Sent: Wednesday, May 04, 2011 4:16 PM
To: Fritzal, Kellee
Cc: Oderman, Jeff; mkane@kbblaw.com
Subject: RE: Fifth Implementation Agreement
Importance: High
Kellee, .
For what it is worth from me, I didn't think the lawyers planned on creating the
memorandums at this time because they are ministerial, standard form documents
that would normally be created at the time the lease is finalized for execution (at the
commencement of the expansion) and will in any event follow the general format that
is already provided as Attachment No. 10 to the DDA. (The memorandums for the
Hyatt lease were done in that fashion.) The form of the Lease shows blank
attachments D and E at this time for placeholder purposes.
If however, you or Murray feel that it is important that drafts of these documents be
prepared at this time, please let Jeff Oderman know and I am surer he can create
something in short order.
Also, can you please confirm that we are still scheduled for the meeting of May 16?
Thank You and Best Regards,
Shawn K. Millbern, LEED AP
Senior Vice President
The Robert Mayer Corporation
660 Newport Center Drive, Suite 1050
Newport Beach, CA 92660
tel 949.759.8091 ext. 251
fax 949.720.1017
cell 949.279.1052
From: Fritzal, Kellee [mailto:KFritzal@surfcity-hb.org]
Sent: Wednesday, May 04, 2011 3:55 PM
To: Murray O. Kane; Oderman, Jeff
Cc: Shawn Millbern
Subject: Fifth Implementation Agreement
Importance: High
Exhibit D (First Amended Memorandum of Lease Containing a Restrictive Covenant) and E
(Amended Memorandum of Lease). Our City Clerk would like to get these as soon as possible
Council/Agency Meeting Held: -A rfi6/6
Deferred/Continued to:
[l Ar v Condition II �App ove enied
C Cler s Sig ure
e
Council Meeting Date: October 18, 2010
Department ID Number: ED 10-045
SUBMITTED TO: Honorable Chairman and Agency Members
SUBMITTED BY: Fred A. Wilson, Executive Director
PREPARED BY: Stanley Smalewitz, Deputy Executive Director/Director of Economic
Development _.
SUBJECT: Approve the Fourth Implementation Agreement to the Amended and
Restated Disposition and Development Agreement (DDA) with Mayer
Financial, L.P. as it relates to the third hotel at the Waterfront master
planned development, providing an additional six (6) months to convey
the Agency land
Statement of Issue: The Redevelopment Agency is requested to approve a Fourth
Implementation Agreement to the Amended and Restated Disposition and Development
Agreement, as it relates to the third hotel at the Waterfront master planned development.
The Agreement provides for an additional six (6) months to convey the Agency land.
Financial Impact: No General Fund fiscal impact.
Redevelopment Agency Recommended Action: Motion to:
A) Approve the "Fourth Implementation Agreement to Amended and Restated Disposition
and Development Agreement;" and,
B) Authorize the Chairperson and Agency Clerk to sign all related documents.
Alternative Action(s):
Do not approve Fourth Implementation Agreement and direct staff accordingly.
REQUEST FOR COUNCIL ACTION
MEETING DATE: 10/18/2010 DEPARTMENT ID NUMBER: ED 10-45
Analysis:
The Waterfront project is a master planned development that began with approval of the
Redevelopment Agency's Disposition and Development Agreement ("DDA") in 1988-. The
DDA has resulted in the development of Hilton Waterfront Beach Resort, Hyatt Regency
Huntington Beach Resort and the adjacent residential community. Since approval of the
original DDA, there have been two implementation agreements as it relates to the Hilton and
Hyatt Hotels.
In September 2008, the Redevelopment Agency approved a Third Implementation
Agreement with the Mayer Corporation (Developer) regarding the timeframe to submit a
proposal and convey the leasehold interest on the property and complete construction of a
new hotel on the property known as Parcel "C", next to the existing Hilton hotel. The
Developer has submitted a proposal to the Planning and Building Department to construct
the new third hotel. However, they are not ready to convey the leasehold interest on the
property.
The Developer has requested a six-month extension on the Schedule of Performance from
December 31, 2010, to June 30, 2011. If the property is not ready to be conveyed by June
30, 2011, then the Developer would pay to the Agency the sum of $250,000. The Fourth
Implementation Agreement retains the incentive for the Developer to convey the land and
develop the hotel by providing a refund provision if the development commences.
Environmental Status: Not Applicable.
Strategic Plan Goal: Maintain financial viability and our reserves
Attachment(s):
1. I"Fourth Implementation Agreement to Amended and Restated
Disposition and Development Aqreement"
�_ _
,:;
I � m i v
,. ,
FOURTH IMPLEMENTATION AGREEMENT
TO AMENDED AND RESTATED
DISPOSITION AND DEVELOPMENT AGREEMENT
This FOURTH IMPLEMENTATION AGREEMENT TO AMENDED AND
RESTATED DISPOSITION AND DEVELOPMENT AGREEMENT (the "Fourth
Implementation Agreement") is dated for reference purposes as of the eT�*day of a7? ,
2010, and is entered into by and between the REDEVELOPMENT AGENCY OF THE CIT
OF HUNTINGTON BEACH, a public body, corporate and politic ("Agency"), and MAYER
FINANCIAL, L.P., a California limited partnership ("Developer") (collectively, the "Parties").
RECITALS
A. Agency and Developer have entered into that certain Amended and Restated
Disposition and Development Agreement dated as of September 14, 1998 (the "Original
Agreement"), as amended by that certain First Implementation Agreement to Amended and
Restated Disposition and Development Agreement dated as of May 15, 2000 (the "First
Implementation Agreement"), that certain Second Implementation Agreement to Amended and
Restated Disposition and Development Agreement dated as of February 5, 2001 (the "Second
Implementation Agreement"), and that certain Third Implementation Agreement to Amended
and Restated Disposition and Development Agreement dated as of October 20, 2008 (the "Third
Implementation Agreement"). The Original Agreement, as amended by the First Implementation
Agreement, the Second Implementation Agreement, and the Third Implementation Agreement, is
hereinafter referred to as the "Existing Agreement." The Existing Agreement provides for the
phased disposition of the "Site" described therein and the development and operation by
Developer on the Site of certain hotel, residential, and related improvements. All defined terms
set forth in this Fourth Implementation Agreement shall have the same meanings as are ascribed
to said terms in the Existing Agreement.
B. Developer previously received the "First Extension" as referred to in Section
203.3(a)(12)(a) of the Existing Agreement.
C. On or about December 18, 2009, Developer submitted to Agency a Proposal for
Agency's review and approval for the development and use of Parcel C, in full compliance with
Section 203.3(a)(12)(b)(1) of the Existing Agreement and Item 25 of the Schedule of
Performance (Attachment No. 3).
D. The Parties are engaged in negotiations over a possible comprehensive
amendment to the Existing Agreement to provide for a new master ground lease covering both
the existing Hilton Parcel and Parcel C to allow the expansion of the existing Hilton Waterfront
Beach Resort per the Proposal. In order to provide the Parties sufficient time to complete said
negotiations, and with each Party reserving the right in its sole and absolute discretion to
determine whether or not to approve any such comprehensive amendment to the Existing
Agreement and the terms thereof, without raising the inference that either party is required to
negotiate in good faith, the Parties desire to extend for six (6) additional months the term of the
112/017963-0011
1116288.02 a09/15/10
D O C S OC/ 143 5 3 5 4v2/022460-0064
"Second Extension" authorized pursuant to Section 203.3(a)(12)(b) of the Existing Agreement
and to make certain other conforming changes to the Existing Agreement.
COVENANTS
Based on the foregoing Recitals, which are incorporated into this Fourth Implementation
Agreement by this reference, and for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the Parties, Agency and Developer agree as
follows:
1. Section 203.3(a)(12)(a) of the Existing Agreement is hereby amended to read in
its entirety as follows:
"With respect to the "First Extension" previously granted to
Developer, the December 31, 2010, deadline for satisfaction of the
conditions precedent for conveyance of the long-term leasehold
interest in Parcel C and the December 31, 2010, closing date are
hereby extended six months to June 30, 2011.
2. Since the Developer has previously submitted a Proposal in conformance with the
Existing Agreement, references to the submission of a Proposal contained in
Section 203.3(a)(12)(b), (c), and (d) of the Existing Agreement are deleted and further all dates
regarding the "Second Extension" contained in Section 203.3(a)(12)(b) are extended six months.
As a result, Section 203.3(a)(12)(b) is hereby amended and restated to read in its entirety as
follows:
"(1) An extension provided in accordance with this
subsection (b) is sometimes hereinafter referred to as the "Second
Extension." If Developer desires to extend by an additional six (6)
months the June 30, 2011, deadline for satisfaction of the
conditions precedent for conveyance of the long-term leasehold
interest in Parcel C and the June 30, 2011, closing date (see Item
36 of the Schedule of Performance [Attachment No. 3], Developer
shall provide written notice to the Agency Executive Director of
Developer's election to so extend such deadlines no later than
April 30, 2011. Without limiting any rights or remedies of the City
or Agency or any notice and cure periods under any Parcel C
Agreement, and only for purposes of the extension provisions of
this Section 12: (A) the Agency Executive Director shall have until
May 31, 2011, to provide a Parcel C Default Notice to Developer;
and (B) in the event a Parcel C Default Notice is timely provided
to Developer, Developer shall have until June 30, 2011, to cure any
such Parcel C Default. If and only if by June 30, 2011, Developer
has both cured any such Parcel C Default and paid to City the sum
of Two Hundred Fifty Thousand Dollars ($250,000) ("Second
112/017963-0011
1116288.02 a09/15/10
-2-
DOCSOC/ 143 53 54v2/022460-0064
Extension Payment"), then the deadline in Item 36 of the Schedule
of Performance shall be extended to December 31, 2011.
(2) In the event Developer receives the Second
Extension pursuant to subparagraph (1) above and thereafter
conveyance to Developer of the long-term leasehold interest in
Parcel C occurs prior to December 31, 2011, then within thirty (30)
days after the closing date for the long-term Parcel C lease,
Agency shall, or shall cause the City to, promptly refund to
Developer a portion of the Second Extension Payment in an
amount equal to the lesser of. (A) the sum of (i) the number of full
months remaining between the date of conveyance to Developer of
the long-term leasehold interest in Parcel C and December 31,
2011, multiplied by (ii) $13,888.89; and (B) the Second Extension
Payment. For illustrative purposes only, if Developer receives the
Second Extension and conveyance to Developer of the long-term
leasehold interest in Parcel C occurs on October 10, 2011, then the
amount of the refund shall be Twenty -Seven Thousand Seven
Hundred Seventy -Seven Dollars and Seventy -Eight Cents
($27,777.78).
3. Except as expressly set forth herein, each and every term set forth in the Existing
Agreement shall remain in full force and effect.
4. This Fourth Implementation Agreement may be executed by Agency and
Developer in different counterparts and the signature pages combined to create a single
document binding on both Parties.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK. SIGNATURE
PAGES FOLLOW]
112/017963-0011
1116288.02 a09/15/10
-3-
DOC SOC/ 143 53 54v2/022460-0064
IN WITNESS WHEREOF, the Parties have executed this Fourth Implementation
Agreement to amended and Restated Disposition and Development Agreement as of the date set
forth above.
Dated: o , 2010
ATTEST:
AND APPROVED:
"AGENCY"
REDEVELOPMENT AGENCY OF THE
CITY OF HUNTINGTON BEACH,
a public body, corporate and politic
APPROVED AS TO FORM:
A ency General Course pl ,1 U
INITIATED AND APPROVED:
Director Director of Econor iic Development
W 0&
STradling Yocca lson & Rauth
Agency Speci�l Co sel
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.
SIGNATURE PAGE FOLLOWS]
112/017963-0011
1116288.02 a09/14/10
10
DOCSOC/ l 435354v2/022460-0064
"DEVELOPER"
MAYER FINANCIAL, L.P.,
a California limited partnership
By: RLM Management, Inc., a California
corporation, its General Partner
Dated: O� ! I (a , 2010 By: ` • ` __...,....
Robe. aye , Jr.
Presi ent
112/017963-0011
1116288.02 a09/15/10 -5-
DOCSOC/ 1435354v2/022460-0064
Council/Agency Meeting Held: 0
Deferred/Continued to:
1 Appro ed ❑ Conditionally Approved ❑ Denied
CftV er s Sig at re
Council Meeting Date: 10/20/2008
Departrrl ° ID Number: 08-47
CITY OF HUNTINGTON BEACH
REQUEST FOR REDEVELOPMENT AGENCY ACTION
SUBMITTED TO: HONORABLE CHAIR AN AND REDEVELOPMENT AGENCY
MEMBERS
SUBMITTED BY: FRED A. WILSON, ADMINISTRATOR/EXECUTIVE DIRECTOR
PREPARED BY: STANLEY SMALE ITZ, DIRECTOR OF ECONOMIC
DEVELOPMENT/DEPUTY EXECUTIVE DIRECTOR
SUBJECT: APPROVE THIRD IMPLEMENTATION AGREEMENT TO
DISPOSITION AND DEVELOPMENT AGREEMENT WITH MAYER
FINANCIAL, L.P.
Statement of Issue, Funding Source, Recommended Action, Alternative Action(s), Analysis, Environmental Status, Attachment(s)
Statement of Issue: A Third Implementation Agreement to the Disposition and
Development Agreement (DDA) has been negotiated between the Redevelopment Agency
("Agency") and Mayer Financial, L.P. ("Developer"). The DDA provides for the phased
disposition and development of the Waterfront Project. The Third Implementation -Agreement
relates to the timeframe for development of Parcel C, which is the land located between the
Waterfront Hilton and the Hyatt Resort and Spa and will result in a third hotel at this location.
Funding Source: Not applicable.
Recommended Action: Motion to:
Approve the Third Implementation Agreement to the Amended and Restated Disposition
and Development Agreement between the Redevelopment Agency of the City of
Huntington Beach and Mayer Financial, L.P.
2. Authorize the Agency Chairman and the Agency Clerk to Execute the Third
Implementation Agreement.
REQUEST FOR REDEVELOPMENT AGENCY ACTION
MEETING DATE: 10/20/2008 DEPARTMENT ID NUMBER: 08-47
Alternative Action(s):
1. Direct staff to pursue modifications to the proposed Third Implementation Agreement.
2. Do not approve the proposed Third Implementation Agreement.
Analysis: The Redevelopment Agency entered into a Disposition and Development
Agreement (DDA) with Mayer Financial, L.P. on September 14, 1998. The DDA was
subsequently amended by the First Implementation Agreement approved on May 15, 2000,
and the Second Implementation Agreement, approved on February 5, 2001. The existing
Agreement provides for the phased disposition of the site (now occupied by the Waterfront
Hilton, Hyatt Huntington Beach Resort and Spa and Parcel C) and the development and
operation on the site of certain hotel, residential and related improvements.
Under the existing Agreement, the Developer is to submit a proposal by December 31, 2008
to develop a new hotel on Parcel C and commence construction no later than December 31,
2009. The Agreement also allows for Agency discretion to provide the Developer the
opportunity to purchase three extensions of time. To obtain the extensions, the Developer is
required to demonstrate that market conditions would make it infeasible to commence the
project in the current timeframe due to unstable market conditions. Each extension also
requires a payment of $250,000 from the Developer to the City to compensate for an
estimated loss in Transient Occupancy Tax (TOT) that the City would have received as a
result of the additional hotel.
Due to unstable market conditions, Mayer Financial, L.P. has requested an extension to
submit a proposal and commence construction of a new hotel on Parcel C. The Third
Implementation Agreement will allow the Developer to purchase up to four (4), one-year
extensions, and provides the option for the Developer to separate the property conveyance
date from the submission of a proposal, which, under the existing Agreement is to occur
concurrently. The Developer would still be required to provide the $250,000 extension for
each request, but would be eligible for a pro-rata refund in the event conveyance of the
property occurs prior to the new conveyance deadline, or approximately one year. For
example, the Developer may request and receive the first extension, providing a $250,000
payment by December 31, 2008 and receive an extension to submit a proposal to December
31, 2009, with conveyance of the property required by December 31, 2010. However, should
a proposal be submitted and payment be made, but conveyance occurs on May 10, 2010,
the Developer will receive a pro-rata refund of the extension payment based on the number
of months remaining between the payment date and the conveyance date. No other terms of
the existing Agreement will be affected with the approval of the Third Implementation
Agreement.
Strategic Plan Goal: L-4: Create an environment that promotes tourism to increase
revenues to support community services and transform the City's economy into a destination
economy.
-2- 10/6/2008 4:22 PM
REQUEST FOR REDEVELOPMENT AGENCY ACTION
MEETING DATE: 10/20/2008 DEPARTMENT ID NUMBER: 08-47
Environmental Status: Not applicable.
Attachment(s):
-3- 10/2/2008 10:08 AM
THIRD IMPLEMENTATION AGREEMENT
TO AMENDED AND RESTATED
DISPOSITION AND DEVELOPMENT AGREEMENT
This THIRD IMPLEMENTATION AGREEMENT TO AMENDED AND RESTATED
DISPOSITION AND DEVELOPMENT AGREEMENT (this "Third Implementation
Agreement"), dated as of 0(77-b,� (z:,Q , 2008, is entered into by and
between the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH
("Agency"), a public body, corporate and politic, and MAYER FINANCIAL, L.P., a California
limited partnership ("Developer") (collectively, the "Parties").
RECITALS
A. Agency and Developer have entered into that certain Amended and Restated
Disposition and Development Agreement dated as of September 14, 1998 (the "Original
Agreement"), as amended by that certain First Implementation Agreement to Amended and
Restated Disposition and Development Agreement dated as of May 15, 2000 (the "First
Implementation Agreement"), and as amended that certain Second Implementation Agreement to
Amended and Restated Disposition and Development Agreement dated as of February 5, 2001
(the "Second Implementation Agreement") (the Original Agreement, the First Implementation
Agreement and the Second Implementation Agreement may hereinafter be referred to together as
the "Existing Agreement"). The Existing Agreement provides for the phased disposition of the
"Site" described therein and the development and operation by Developer on the Site of certain
hotel, residential, and related improvements. All defined terms set forth in this Third
Implementation Agreement shall have the same meanings as are ascribed to said terms in the
Existing Agreement except as may be expressly set forth herein.
B. The Existing Agreement provides for Developer to submit a proposal to Agency for
the development of and use of Parcel C no later than December 31, 2008, and, subject to the
notice and cure provisions of Sections 501 through 503, inclusive, of the Existing Agreement and
to the enforced delay provisions of Section 604 of the Existing Agreement, to take all other
actions necessary to prepare for commencement of construction no later than December 31,
2009, as more particularly set forth in the Existing Agreement. Due to the recent downturn in
the economy, Developer has requested from Agency certain modifications to deadlines for
development of the Parcel C. Agency is agreeable to providing such modifications pursuant to
the terms and conditions of this Third Implementation Agreement.
COVENANTS
Based on the foregoing Recitals, which are incorporated into this Third Implementation
Agreement by this reference, and for good and valuable consideration, the receipt of which is
hereby acknowledged by the Parties, Agency and Developer agree that the Existing Agreement
shall be amended as follows:
I. Section 203.3(a)(12) of the Existing Agreement is hereby deleted and replaced in its
entirety to read as follows:
Third Imp Agmt.v4
412. Developer shall have submitted a Proposal (as defined in subsection e.,
below) to Agency for Agency's review and approval for the development and use of Parcel C no
later than December 31, 2008, and Developer shall have satisfied all conditions precedent for
conveyance of the leasehold interest in Parcel C no later than December 31, 2009; provided,
however, that if Developer is not in material default of any of Developer's obligations to Agency
or the City of Huntington Beach pertaining to Parcel C as set forth in any of the Parcel C
Agreements as defined in subsection f., below, as the same may be amended or modified from
time to time (each a "Parcel C Default"), at the time Developer elects to extend such deadlines,
Developer shall have the right to purchase up to four one-year extensions of such deadlines in
accordance with the following:
(a) (1) An extension provided in accordance with this subsection (a) is
sometimes hereinafter referred to as the "First Extension." If Developer desires to extend by one
year the December 31, 2008 deadline for submitting a Proposal to Agency for Agency's review
and approval for the development and use of Parcel C and the corresponding December 31, 2009
deadline for satisfaction of the conditions precedent for conveyance of the long-term leasehold
interest in Parcel C and the December 31, 2009 closing date (see Items 25 and 36 of the Schedule
of Performance [Attachment No. 3]), Developer shall provide written notice to the Agency
Executive Director of Developer's election to so extend such deadlines no later than October 31,
2008. Without limiting any rights or remedies of the City or Agency or any notice and cure
periods under any Parcel C Agreement, and only for purposes of the extension provisions of this
Section 12: (A) the Agency Executive Director shall have until November 30, 2008 to provide
notice to Developer if there is a Parcel C Default ("Parcel C Default Notice"), and (B) in the
event a Parcel C Default Notice is timely provided to Developer, Developer shall have until
December 31, 2008 to cure any such Parcel C Default. If and only if by December 31, 2008
Developer has both cured any such Parcel C Default and paid to City the sum of Two Hundred
Fifty Thousand Dollars ($250,000) ("First Extension Payment"), then the deadline in Item 25 of
the Schedule of Performance shall be extended to December 31, 2009, and the deadline in Item
36 of the Schedule of Performance shall be extended to December 31, 2010.
Alternatively, if Developer timely submits a Proposal for Agency's review and
approval for the development and use of Parcel C on or before December 31, 2008 without first
electing to obtain the First Extension, but Developer desires to extend by one year the December
31, 2009 deadline for satisfaction of the conditions precedent for conveyance of the long-term
leasehold interest in Parcel C and the December 31, 2009 closing date, Developer shall provide
written notice to the Agency Executive Director of Developer's election to so extend such
deadlines no later than October 31, 2009. Without limiting any rights or remedies of the City or
Agency or any notice and cure periods under any Parcel C Agreement, and only for purposes of
the extension provisions of this Section 12: (A) the Agency Executive Director shall have until
November 30, 2009, to provide a Parcel C Default Notice to Developer; and (B) in the event a
Parcel C Default Notice is timely provided to Developer, Developer shall have until December
31, 2009, to cure any such Parcel C Default and pay to City the First Extension Payment. If and
only if by December 31, 2009 Developer has both cured any such Parcel C Default and paid to
the City the First Extension Payment, then the deadline in Item 36 of the Schedule of
Performance shall be extended to December 31, 2010.
Third Imp Agmt.v4 -2-
(2) In the event Developer receives the First Extension pursuant to
either of the alternatives set forth in subparagraph (1) above and thereafter conveyance to
Developer of the long-term leasehold interest in Parcel C occurs prior to December 31, 2010,
then, within thirty (30) days after the closing date for the long-term Parcel C lease, Agency shall,
or shall cause the City to, promptly refund to Developer a portion of the First Extension Payment
in an amount equal to the lesser of: (A) the sum of (i) the number of months remaining between
the date of conveyance to Developer of the long-term leasehold interest in Parcel C and
December 31, 2010 multiplied by (ii) $20,833; and (B) the First Extension Payment. For
illustrative purposes only, if Developer receives the First Extension and conveyance to
Developer of the long-term leasehold interest in Parcel C occurs on May 10, 2010, then the
amount of the refund shall be One Hundred Forty -Five Thousand Eight Hundred Thirty -One
Dollars ($145,831).
(b) (1) An extension provided in accordance with this subsection (b) is
sometimes hereinafter referred to as the "Second Extension." In the event Developer receives
the First Extension, with respect to the second such one-year extension, if Developer desires to
extend by one year the December 31, 2009 deadline for submitting a Proposal to Agency for
Agency's review and approval for the development and use of Parcel C and the corresponding
December 31, 2010 deadline for satisfaction of the conditions precedent for conveyance of the
long-term leasehold interest in Parcel C and the December 31, 2010 closing date (see Items 25
and 36 of the Schedule of Performance as previously extended in accordance with subsection (a),
above), Developer shall provide written notice to the Agency Executive Director of Developer's
election to so extend such deadlines no later than October 31, 2009. Without limiting any rights
or remedies of the City or Agency or any notice and cure periods under any Parcel C Agreement,
and only for purposes of the extension provisions of this Section 12: (A) the Agency Executive
Director shall have until November 30, 2009 to provide to Developer a Parcel C Default Notice;
and (B) in the event a Parcel C Default Notice is timely provided to Developer, Developer shall
have until December 31, 2009 to cure any such Parcel C Default. If and only if by December 31,
2009 Developer has both cured any such Parcel C Default and paid to City the sum of Two
Hundred Fifty Thousand Dollars ($250,000) ("Second Extension Payment"), then the deadline in
Item 25 of the Schedule of Performance shall be extended to December 31, 2010, and the
deadline in Item 36 of the Schedule of Performance shall be extended to December 31, 2011.
Alternatively, if Developer timely submits a Proposal for Agency's review and
approval for the development and use of Parcel C on or before December 31, 2009 without first
electing to obtain the Second Extension, but Developer desires to extend by one year the
December 31, 2010 deadline for satisfaction of the conditions precedent for conveyance of the
long-term leasehold interest in Parcel C and the December 31, 2010 closing date, Developer shall
provide written notice to the Agency Executive Director of Developer's election to so extend
such deadlines no later than October 31, 2010. Without limiting any rights or remedies of the
City or Agency or any notice and cure periods under any Parcel C Agreement, and only for
purposes of the extension provisions of this Section 12: (A) the Agency Executive Director shall
have until November 30, 2010, to provide a Parcel C Default Notice to Developer; and (B) in the
event a Parcel C Default Notice is timely provided to Developer, Developer shall have until
December 31, 2010, to cure any such Parcel C Default and pay to City the Second Extension
Payment. If and only if by December 31, 2010 Developer has both cured any such Parcel C
Third Imp Agmt.v4 -3-
Default and paid to the City the Second Extension Payment, then the deadline in Item 36 of the
Schedule of Performance shall be extended to December 31, 2011.
(2) In the event Developer receives the Second Extension pursuant to
either of the alternatives set forth in subparagraph (1) above and thereafter conveyance to
Developer of the long-term leasehold interest in Parcel C occurs prior to December 31, 2011,
then, within thirty (30) days after the closing date for the long-term Parcel C lease, Agency shall,
or shall cause the City to, promptly refund to Developer a portion of the Second Extension
Payment in an amount equal to the lesser of (A) the sum of (i) the number of months remaining
between the date of conveyance to Developer of the long-term leasehold interest in Parcel C and
December 31, 2011 multiplied by (ii) $20,833; and (B) the Second Extension Payment. For
illustrative purposes only, if Developer receives the Second Extension and conveyance to
Developer of the long-term leasehold interest in Parcel C occurs on May 10, 2011, then the
amount of the refund shall be One Hundred Forty -Five Thousand Eight Hundred Thirty -One
Dollars ($145,831).
(c) (1) An extension provided in accordance with this subsection (c) is
sometimes hereinafter referred to as the "Third Extension." In the event Developer receives the
First Extension and the Second Extension, with respect to the third such one-year extension, if
Developer desires to extend by one year the December 31, 2010 deadline for submitting a
Proposal to Agency for Agency's review and approval for the development and use of Parcel C
and the corresponding December 31, 2011 deadline for satisfaction of the conditions precedent
for conveyance of the long-term leasehold interest in Parcel C and the December 31, 2011
closing date (see Items 25 and 36 of the Schedule of Performance as previously extended in
accordance with subsections (a) and (b), above), Developer shall provide written notice to the
Agency Executive Director of Developer's election to so extend such deadlines no later than
October 31, 2010. Without limiting any rights or remedies of the City or Agency or any notice
and cure periods under any Parcel C Agreement, and only for purposes of the extension
provisions of this Section 12: (A) the Agency Executive Director shall have until November 30,
2010 to provide to Developer a Parcel C Default Notice; and (B) in the event a Parcel C Default
Notice is timely provided to Developer, Developer shall have until December 31, 2010 to cure
any such Parcel C Default. If and only if by December 31, 2010 Developer has both cured any
such Parcel C Default and paid to City the sum of Two Hundred Fifty Thousand Dollars
($250,000) ("Third Extension Payment"), then the deadline in Item 25 of the Schedule of
Performance shall be extended to December 31, 2011, and the deadline in Item 36 of the
Schedule of Performance shall be extended to December 31, 2012.
Alternatively, if Developer timely submits a Proposal for Agency's review and
approval for the development and use of Parcel C on or before December 31, 2010 without first
electing to obtain the Third Extension, but Developer desires to extend by one year the
December 31, 2011 deadline for satisfaction of the conditions precedent for conveyance of the
long-term leasehold interest in Parcel C and the December 31, 2011 closing date, Developer shall
provide written notice to the Agency Executive Director of Developer's election to so extend
such deadlines no later than October 31, 2011. Without limiting any rights or remedies of the
City or Agency or any notice and cure periods under any Parcel C Agreement, and only for
purposes of the extension provisions of this Section 12: (A) the Agency Executive Director shall
have until November 30, 2011, to provide a Parcel C Default Notice to Developer; and (B) in the
Third Imp AgmtA -4-
event a Parcel C Default Notice is timely provided to Developer, Developer shall have until
December 31, 2011, to cure any such Parcel C Default and pay to City the Third Extension
Payment. If and only if by December 31, 2011 Developer has both cured any such Parcel C
Default and paid to the City the Third Extension Payment, then the deadline in Item 36 of the
Schedule of Performance shall be extended to December 31, 2012.
(2) In the event Developer receives the Third Extension pursuant to
either of the alternatives set forth in subparagraph (1) above and thereafter conveyance to
Developer of the long-term leasehold interest in Parcel C occurs prior to December 31, 2012,
then, within thirty (30) days after the closing date for the long-term Parcel C lease, Agency shall,
or shall cause the City to, promptly refund to Developer a portion of the Third Extension
Payment in an amount equal to the lesser of. (A) the sum of (i) the number of months remaining
between the date of conveyance to Developer of the long-term leasehold interest in Parcel C and
December 31, 2012 multiplied by (ii) $20,833; and (B) the Third Extension Payment. For
illustrative purposes only, if Developer receives the Third Extension and conveyance to
Developer of the long-term leasehold interest in Parcel C occurs on May 10, 2012, then the
amount of the refund shall be One Hundred Forty -Five Thousand Eight Hundred Thirty -One
Dollars ($1.45,831).
(d) (1) An extension provided in accordance with this subsection (d) is
sometimes hereinafter referred to as the "Fourth Extension." In the event Developer receives the
First Extension, Second Extension and Third Extension, with respect to the fourth such one-year
extension, if Developer desires to extend by one year the December 31, 2011 deadline for
submitting a Proposal to Agency for Agency's review and approval for the development and use
of Parcel C and the corresponding December 31, 2012 deadline for satisfaction of the conditions
precedent for conveyance of the long-term leasehold interest in Parcel C and the December 31,
2012 closing date (see Items 25 and 36 of the Schedule of Performance as previously extended in
accordance with subsections (a), (b), and (c) above), Developer shall provide written notice to
the Agency Executive Director of Developer's election to so extend such deadlines no later than
October 31, 2011. Without limiting any rights or remedies of the City or Agency or any notice
and cure periods under any Parcel C Agreement, and only for purposes of the extension
provisions of this Section 12: (A) the Agency Executive Director shall have until November 30,
2011 to provide to Developer a Parcel C Default Notice; and (B) in the event a Parcel C Default
Notice is timely provided to Developer, Developer shall have until December 31, 2011 to cure
any such Parcel C Default. If and only if by December 31, 2011 Developer has both cured any
such Parcel C Default and paid to City the sum of Two Hundred Fifty Thousand Dollars
($250,000) ("Fourth Extension Payment"), then the deadline in Item 25 of the Schedule of
Performance shall be extended to December 31, 2012, and the deadline in Item 36 of the
Schedule of Performance shall be extended to December 31, 2013.
Alternatively, if Developer timely submits a Proposal for Agency's review and
approval for the development and use of Parcel C on or before December 31, 2011 without first
electing to obtain the Fourth Extension, but Developer desires to extend by one year the
December 31, 2012 deadline for satisfaction of the conditions precedent for conveyance of the
long-term leasehold interest in Parcel C and the December 31, 2012 closing date, Developer shall
provide written notice to the Agency Executive Director of Developer's election to so extend
such deadlines no later than October 31, 2012. Without limiting any rights or remedies of the
Third Imp Agrnt.v4 -5-
City or Agency or any notice and cure periods under any Parcel C Agreement, and only for
purposes of the extension provisions of this Section 12: (A) the Agency Executive Director shall
have until November 30, 2012, to provide a Parcel C Default Notice to Developer; and (B) in the
event a Parcel C Default Notice is timely provided to Developer, Developer shall have until
December 31, 2012, to cure any such Parcel C Default and pay to City the Fourth Extension
Payment. If and only if by December 31, 2012 Developer has both cured any such Parcel C
Default and paid to the City the Fourth Extension Payment, then the deadline in Item 36 of the
Schedule of Performance shall be extended to December 31, 2013.
(2) In the event Developer receives the Fourth Extension pursuant to
either of the alternatives set forth in subparagraph (1) above and thereafter conveyance to
Developer of the long-term leasehold interest in Parcel C occurs prior to December 31, 2013,
then, within thirty (30) days after the closing date for the long-term Parcel C lease, Agency shall,
or shall cause the City to, promptly refund to Developer a portion of the Fourth Extension
Payment in an amount equal to the lesser of. (A) the sum of (i) the number of months remaining
between the date of conveyance to Developer of the long-term leasehold interest in Parcel C and
December 31, 2013 multiplied by (ii) $20,833; and (B) the Fourth Extension Payment. For
illustrative purposes only, if Developer receives the Fourth Extension and conveyance to
Developer of the long-term leasehold interest in Parcel C occurs on May 10, 2013, then the
amount of the refund shall be One Hundred Forty -Five Thousand Eight Hundred Thirty -One
Dollars ($145,831).
(e) "Proposal" as used in this Agreement shall consist of submissions by Developer
comprised of all of the following: (1) to the City Planning Department, an executed general
application form with a check for the appropriate filing fees for a Conditional Use Permit and
Coastal Development Permit for the proposed project on Parcel C, which project must be
consistent with this Agreement as either a new hotel, or an addition to the existing Waterfront
Hilton Beach Resort, or an all -suites development, as more particularly set forth herein; (2) to the
City Planning Department, twelve (12) sets of scaled and dimensioned site plans, floor plans,
building elevations and a preliminary grading plan depicting the proposed project on Parcel C,
which project must be consistent with this Agreement as either a new hotel, or an addition to the
existing Waterfront Hilton Beach Resort, or an all -suites development, as more particularly set
forth herein; and (3) to the City Planning Department and the Agency Executive Director, a brief
written narrative summarizing the salient features and statistics of the proposed project on Parcel
C, which project must be consistent with this Agreement as either a new hotel, or an addition to
the existing Waterfront Hilton Beach Resort, or an all -suites development, as more particularly
set forth herein. The parties agree that for purposes of this Agreement the Agency Executive
Director shall have the right to determine in his or her reasonable discretion whether a Proposal
for the development and use of Parcel C is timely and validly submitted consistent with the
foregoing.
(f) "Parcel C Agreements" as used in this Agreement shall mean each of the
following: (1) the Existing Agreement, as modified by this Third Implementation Agreement, to
the extent the same pertain to Parcel C; (2) that certain Interim Short -Term Lease that was
entered into by and between Agency, as landlord, and Developer, as tenant, with respect to
Parcel C on or about April 14, 1999, as memorialized in the memorandum of lease recorded on
April 19, 1999, as Instrument No. 19990285625 and April 7, 2000, as Instrument No.
Third Imp Aamcv4 -6-
20000179415 in the Official Records of Orange County, California (the "Interim Short -Term
Lease"), which Interim Short -Term Lease was subsequently assigned by Developer to The
Waterfront Hotel, LLC, and subsequently reassigned by The Waterfront Hotel, LLC, to
Developer pursuant to that certain Assignment of Lease dated as of August 29, 2006, that was
recorded on August 30, 2006, as Instrument No. 2006000582100 in the Official Records of
Orange County, California; (3) that certain License Agreement to Provide Landscaping and other
Improvements in the Public Right of Way dated February 20, 2001, that was entered into by and
among the City of Huntington Beach, The Waterfront Hotel, LLC, and Developer and was
recorded on April 18, 2001, as Instrument No. 20010232765 in the Official Records of Orange
County, California (the "License Agreement"), which License Agreement was subsequently
assigned by The Waterfront Hotel, LLC, to Developer with respect to Parcel C pursuant to that
certain. Assignment of License Agreement to Provide Landscaping and other Improvements in
the Public Right -of -Way dated as of August 29, 2006, and recorded on August 30, 2006, as
Instrument No. 2006000582012 in the Official Records of Orange County, California; (4) that
certain Reciprocal Fire Lane Access Easement Agreement dated as of August 30, 1995, that was
entered into by and between Agency, Robert L. Mayer, as Trustee of the Robert L. Mayer Trust
of 1982, dated June 22, 1982, as amended, and Waterfront Construction No. 1, and was recorded
on September 1, 1995, as Instrument no. 95-0384750 in the Official Records of Orange County,
California; (5) that certain Waterfront Parking Easement Agreement dated as of August 29,
2006, that was entered into by and between Developer and The Waterfront Hotel, LLC, and
consented to by Agency and recorded on August 30, 2006, as Instrument No. 2006000582103 in
the Official Records of Orange County, California; and (6) that certain Parcel C Parking
Easement Agreement dated as of August 29, 2006, that was entered into by and between
Developer and The Waterfront Hotel, LLC, and consented to by Agency and recorded on August
30, 2006, as Instrument No. 2006000582104 in the Official Records of Orange County,
California.
(g) The parties shall cooperate in executing any documents necessary to evidence the
First Extension, Second Extension, Third Extension, and Fourth Extension, as applicable.
(h) Developer acknowledges and agrees that: (1) Agency and City are not legally
authorized to make, and Agency has not by executing this Agreement made, any commitment or
guaranty with respect to approval and certification of any discretionary action which has not yet
been approved or certified or any ministerial action dependent upon or reasonably related to such
discretionary action; (2) such approvals and certifications may only be given after the relevant
decision -making persons or bodies, exercising their independent judgment, have acted in their
governmental capacities to approve or deny each required discretionary action in accordance
with applicable laws, rules, and regulations; and (3) nothing in this Agreement shall supersede,
waive, limit, modify, or affect in any way the rights of Agency or City with respect to any
discretionary or regulatory approvals required to be obtained from any governmental entities
under applicable federal, state or local laws; (4) nothing in this Agreement shall supersede,
waive, limit, modify, or affect in any way timelines, submissions, approvals, or any other matter
under the Permit Streamlining Act (Government Code Section 65920 et seq.); and (5) submission
of a Proposal is not satisfaction of Item 27 in the Schedule of Performance."
2. Paragraphs 25 and 36 of Attachment No. 3 to the Original Agreement (Schedule of
Performance) are hereby deleted and replaced in their entirety to read as follows:
Third Imp Agmt.v4 -7-
"25
36
Submission - Proposal for Development
and Use of Parcel C. Developer shall
submit to Agency for approval or
disapproval a Proposal for the
development and use of Parcel C.
Conveyance of Parcel C: Close of
Escrow. Agency shall execute the Lease
for Parcel C, a memorandum of such
Lease shall be recorded, and the escrow
for the lease of Parcel C to Developer
shall close.
On or before December 31, 2008
(subject to extension as set forth
Section 203.3.(a)1.2 of this Agreement).
Not later than December 31, 2009
(subject to extension as set forth in
Section 203.3.(a)12 of this Agreement),
but only if all conditions precedent for
conveyance of Parcel C have been
satisfied or waived by the benefited
party or parties."
3. Except as set expressly set forth herein, each and every term set forth in the Existing
Agreement shall remain in full force and effect.
4. This Third Implementation Agreement may be executed by Agency and Developer in
different counterparts and the signature pages combined to create a single document
binding on both Parties.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK. SIGNATURE
PAGES FOLLOWS]
Third I np Aamtv4 -8-
IN WITNESS WHEREOF, the parties have executed this Third Implementation
Agreement to Amended and Restated Disposition and Development Agreement as of the date set
forth above.
r
REVIE)YED/hND APPROVED:
Director
APPROVED AS TO FORM:
C
Kane, Ba 1 r Berkman
Agency Spebid Counsel
"AGENCY"
REDEVELOPMENT AGENCY OF THE
CITY OF HUNTINGTON BEACH,
a public body, corporate and politic
By: /ai
4h&4k--,-_
Chairman
APPROVED AS TO FORM:
f
r� A ency General Counsel
. a2 .C)Sr
INITIATED AND APPROVED:
Director of Economic Deve opment
Deputy Executive Director
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK. SIGNATURE
PAGE FOLLOWS.]
Third Imp Agmt.v4 -9-
"DEVELOPER"
MAYER FINANCIAL, L.P.,
a California limited partnership
By: RLM Management, Inc., a California
corporation, its General Partner
Dated: / 2008 By:
Rober QL.ay, Jr.
Presid
Third Imp Agmt.v4 -10-
po:
INITIATING DEPARTMENT:
Economic Development
SUBJECT:
Approve Third Implementation Agreement with Mayer
Financial, L.P.
COUNCIL MEETING DATE:
October 20, 2008
RCA ATTACHMENTS
STATUS,
Ordinance (w/exhibits & legislative draft if applicable)
Attached
❑
Not Ap licable
Resolution (w/exhibits & legislative draft if applicable)
Attached
❑
Not Applicable
Tract Map, Location Map and/or other Exhibits
Attached
❑
Not Applicable
Contract/Agreement (w/exhibits if applicable)
Attached
(Signed in full by the City Attorney)
Not Applicable
❑
Subleases, Third Party Agreements, etc.
Attached
❑
(Approved as to form by City Attorney)
Not Applicable
Certificates of Insurance (Approved by the City Attorney)
Attached
❑
Not Applicable
Fiscal Impact Statement (Unbudgeted, over $5,000)
Attached
❑
Not Applicable
Bonds (If applicable)
Attached
❑
Not Applicable
Staff Report (If applicable)
Attached
Not Applicable
❑
Commission, Board or Committee Report (If applicable)
Attached
❑
Not Applicable
Findings/Conditions for Approval and/or Denial
Attached
❑
Not Applicable
EXPLAHAT(OH FOP, M=Wrp ATTAC M iv EHT3 ;:
REVIEWED
.RE: �NED :<<
FORDED.
Administrative Staff
Deputy City Administrator (Initial)
I )
City Administrator (Initial)
)
( rtd)
a
City Clerk
( )
I
EXPLANATION FOR RETURN OF ITEM:
t ?S`Ji _ % 1-i iZn i
l ; - 151/T
� -L(i W P— — lRCI%.. e L L/
(apiow Spijop•
RCA Author: slifman
•
J. fe
CITY OF HUNTINGTON BEACH
Inter -Department Communication
TO: JOAN FLYNN, City Clerk
FROM: JENNIFER MCGRATfI, City Attorney
DATE: August 29, 2005
SUBJECT: Waterfi-ont / Hyatt Refinancing
Ct IY
CITY ELF
H"' ' I T I'.t]TC4 EE1r CII. Cis
(G J 1
Attached are copies of three separate estoppel certificates executed by the Agency and the City
in connection with the refinancing by Mayer Financial, LLP as developer under the Amended
and Restated Disposition and Development Agreement dated September 14, 1998.
If you have any questions, please do not hesitate to contact Leonie Mulvihill of my office.
-PJ9-- t 8/2.?A t-
,�.i JENNIFER MCGRAT11,
City Attorney
Attachments as above
g1mulvihilL105memos'clerk hyatt dots
FF, � CITY OF HUNTINGTON BEACH
'� 2000 MAIN STREET CALIFORNIA 92648
August 10 , 2005
By Federal Exl2ress
GMAC Commercial Mortgage Bank
6955 Union Park Center
Suite 330 t t
Midvale, Utah 84047
Attn.: Loan Notices (GMACCM Loan No.1049864)
Katten Muchin Rosenman LLP
1025 Thomas Jefferson Street, N.W.
East Lobby
Suite 700
Washington, D.C. 20007-5201
AM.: Christopher J,. Hart, Esq.
Re: Confirmation of Estoppel Agreement Regarding, Disp9sition and Develo ment
Agreement
Dear Sirs:
By execution of this letter, the undersigned hereby acknowledges that the Estoppel Agreement
Regarding Disposition and Development Agreement, dated as of October 15, 2004 (" sto l")
and attached hereto as Exhibit "A" and entered into by and among the Redevelopment Agency of
the City of Huntington Beach ("Agency"), PCH Beach Resort, LLC ("Developer'), PCH Resort
Holding, LLC ("Mezzanine Borrower', GMAC Commercial Mortgage Bank ("Senior Lender')
and GMAC Commercial Mortgage Corporation ("Junior Lender'') remains in full force and
effect. Subject to the modifications noted below, there are no changes to the information and the
representations made by the Agency contained in the Estoppel:
1. The Agency acknowledges that the Mezzanine Loan, as defined in the Estoppel,
,Ail] be paid in full and the amount of the Senior Loan increased to
$l 15,000,000.00 as agreed to by Developer, Mezzanine Borrower, Senior Lender
and Junior Lender (the "Loan"). As a result, any reference to "Junior Lender",
"Mezzanine Loan", "Mezzanine Borrower", "Pledge Agreement", "Mezzanine
Loan Documents", "Mezzanine Loan Agreement", "Intercreditor Agreement", or
"Mezzanine Note" in the Estoppel shall no longer apply. Any reference to "Deed
of Trust" shall mean that certain Amended and Restated Leasehold Deed of Trust,
Assignment of Rents and Profits, Security Agreement and Fixture Filing executed
by the Developer in connection Aith the Loan.
GMAC Commercial Mortgage Bank
Katten Muchin Roseniran LLP
August 10 , 2005
Page 2
2. The Agency acknowledges and agrees that Exhibit' B" to the Estoppel shall be
replaced with the document attached hereto as Exhibit "B' to this letter.
3. The Agency acknowledges that S.-mor Lender will rely on this letter in making
the Loan.
Sincerely yours,
'>l
gK
- z -Title: E ecutave D:.re for
Redevelopment Agency of the City of Huntington Beach,
a public body, corporate and politic
Attachment
cc: Mr. Reno Aida (GMACCM)
State of California
County of Orange
Ol� , fin' -before me, _ K.CoQeland , personalty appeared
v
Penelope Culbreth-Graft known to me to be the person whose name is subscribed to the
within instrument and acknowledged to me that she executed the same in her authorized capacity, and
that by her signature on the instrument the person, or the entity upon behalf of which the person acted,
executed the instrument.
�... i<. COFELI,Nn
COMM. �t4c5eoe
V �� NOTARYPUB:IC•CALIfCnNIA
n
F - MY COMM. EXPIRES APRIL S.2007 `
WITNESS my hand and official seal.
i
. r
GMAC Commercial Mortgage Bank
Katten Muchin Rosenman LLP
August 10 , 2005
Page 3
EXHIBIT "A"
Estoppel
(see attach:d)
1 � ,
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Katten Muchin Zavis Rosenman
1025 Thomas Jefferson Street, N.W.
East Lobby, Suite 700
Washington, D.C. 20007-5201
Attention: Christopher J. Hart, Esq.
(Space Above For Recorder's Use)
ESTOPPEL AGREEMENT REGARDING DISPOSITION AND DEVELOP
,6GREEMENT
THIS ESTOPPEL AGREEMENT REGARDING DISPOSITION AND
DEVELOPMENT AGREEMENT {"Agreement") is made and entered into as of the W'F- day
of . 2004, by and among the REDEVELOPMENT AGENCY OF THE CITY OF
HUNTINGTON BEACH, a public body, corporate and politic (herein the "Agency"); PCH
BEACH RESORT, LLC, a California limited liability company ("Developer'); PCH RESORT
HOLDING, LLC, a Delaware limited liability company ("Mezzanine Borrower'), GMAC
COMMERCIAL MORTGAGE BANK, a Utah industrial bank (together with its successors and
assigns, "Senior Lender"); and GMAC COMMERCIAL MORTGAGE CORPORATION, a
California corporation (together with its successors and assigns, "Junior Lender").
P LIMINARY RECITALS:
A. The Agency and Mayer Financial, L.P., as developer ("Mayer') have entered into
an Amended and Restated Disposition and Development Agreement dated as of September 14,
1998 ("Original Agreement', as amended by that certain First Implementation Agreement to
Amcnded and Restated Disposition and Development Agreement dated as of May 15, 2000
("First implementation Agreement'3 and as further amended by Second Implementation
Agreement to Amended and Restated Disposition and Development Agreement dated as of
February 5, 2001 ("Second Implementation Agreement") (the Original Agreement as amended
by the First Implementation Agreement and Second Implementation Agreement being herein
referred to as the "DDA') pursuant to which the Agency has acquired the Development Property
as described in Exhibit "A" attached hereto ("Development Property").
B. The Developer has acquired the interest of Mayer in the DDA insofar as the DDA
relates to and affects the Development Property pursuant to that certain Assignment and
Assumption Agreement and Consent to Assignment dated April3, 200I. The Agency has
consented to such acquisition and acknowledged and agreed that for purposes of the
development or the Development Property the Developer shall be the "developer" of the same as
set forth in the DDA and is entitled to all of the benefits of the "developer" under the DDA
insofar as it affects or relates to the Development Property.
1 EzV19740a l s
526197.51 910' A104
S
C. 1n furtherance of the DDA and in order to construct the required improvements on
the Development Property, the Agency, as landlord, and the Developer, as lessee, have executed
and delivered that certain Ground Lease dated April, 2001, a Memorandum of which was
recorded on April 18, 2001, as Document No. 20010232769 in the Office of the County
Recorder, Orange County, California, pursuant to which the Agency has ]eased the Development
Property to Developer ("Ground Lease').
D. Pursuant to the terms of the Ground Lease, the Developer has agreed to construct
on the Development Property and operate either itself or through a hotel manager a resort hotel
of approximately 519 keyed guest rooms, a conference tenter and other amenities ("Resort Hotel
Project' j.
E. The Developer obtained a bridge loan from Senior Lender on or about May 29,
2003, in the original principal amount of Eighty -Five Million and No/100 Dollars
(S85,000,000.00) (the "Bridge Loan) to refinance a construction loan. In furtherance thereof,
Developer and Server Lender entered into certain loan documents wherein Senior Lender
disbursed the Bridge Loan, or portions thereof, to Developer under the- conditions contained
therein.
F. Developer has obtained from Senior Lender a commitment for a senior loan (the
"Senior Loan') in the maximum principal amount of Ninety -Five Million and No/] 00 Dollars
($95,000,000.00) and in connection therewith tre Developer will execute and deliver to Senior
Lender its deed of trust encumbering and conveying the DeveIoper's interest in the Resort Hotel
Project as security for the Senior Loan. In furtherance thereof, Developer and Senior Lender
have entered into or will enter into certain loan documents ("Senior Loan Documents') wherein
Senior Lender shall disburse the Senior Loan, or portions thereof, to Developer under the
conditions contained therein.
G. To evidence the Senior Loan, the Developer will be executing and delivering to
Senior Lender its Deed of Trust Note in the amount of the Senior Loan (herein the "Senior
Note").
H. As security for the repayment of the Senior Note, among other collateral
documents, the Developer has or will be executing and delivering to Fidelity National Title
Company, as trustee, for the benefit of Senior Lender its Leasehold Deed of Trust, Assignment
of Rents and Profits, Security Agreement, and Fixture Filing of even date herewith (herein the
-Deed of Trust') conveying the Development Property in trust to Fidelity National Title
Company, as trustee, for the benefit of the Senior Lender.
L Junior Lender has entered into a commitment to make a mezzanine loan (the
"Mezzanine Loan") to Mezzanine Borrower, the sole managing member of Developer, in the
maximum principal amount of Twenty Million and No/100 Dollars ($20,000,000.00) and in
connection therewith the Mezzanine Borrower v.ill execute and deliver to Junior Lender, among
other collateral documents, its pledge and security agreement (the "Pledge Agreement") creating
a security interest in Mezzanine Borrower's direct and/or indirect ownership interests in
Developer, which security interest is in favor of Junior Lender and is security for the Mezzanine
Loan. In furtherance thereof, Mezzanine Borrower and Junior Lender have entered into or will
162'0197s,4001] -�-
S:6197.11 SIWIyW
..
enter into certain loan documents ("Mezzanine Loan Documents"), including, without limitation,
a loan agreement (the "Mezzanine Loan Agreement") wherein Junior Lender shall disburse the
Mezzanine Loan, or portions thereof, to Mezzanine Borrower under the conditions contained
therein, and an intercreditor agreement with Senior Lender (the "Iniercreditor Agreement").
J. To evidence the Mezzanine Loan, the Mezzanine Borrower will be executing and
delivering to Junior Lender a promissory note in the amount of the Mezzanine Loan (herein the
"Mezzanine Note").
K. The proceeds of the Senior Loan and the Mezzanine Loan will be used to
refinance the Bridge Loan and repay other existing loam and preferred equity affecting the
Development Property.
L. The parties are executing this Agreement for the purpose of setting forth certain
understandings with respect to the mortgaging of the leasehold estate created under the Ground
Lease.
NOW THEREFORE, in consideration of the maiang of the Senior Loan and the
Mezzanine Loan it is agreed as follows:
1. The aforesaid Recitals are incorporated herein.
2. The Ground Lease and the DDA constitute the entire agreement between the
Agency and Developer with respect to the leasing of the Development Property and:
(a) Except for the Ground Lease and the DDA, there are no other agreements
or understandings, whether written or oral, between Developer and
Agency with respect to the Ground Lease or the Development Property,
and
(b) Agency has not received written notice of any pending eminent domain
proceedings or other governmental actions or judicial actions against
.either Agency's or Developer's interest in the Development Property,
including, without limitation, actions relating to violations of any
environmental laws, and Agency has no reason to believe that there are
grounds for any claim of any such action.
3. The Agency acknowledges (i) that the Developer is executing and delivering to
Senior Lender the aforesaid Deed of Trust encumbering and conveying the Developer's interest
in the Ground Lease as security for the aforesaid Senior Loan and (ii) that Mezzanine Borrower
is executing and delivering to Junior Lender the aforesaid Pledge Agreement creating a security
interest in the Mezzanine Borrower's direct and/or indirect ownership interests in Developer,
which security interest is in favor of Junior Lender, and, to the extent the consent of the Agency
is required for such acts on the part of the -Developer, the Agency consents to the same including
(i) the mortgaging and conveying of the Developer's leasehold estate in the Ground Lease, the
leasehold improvements and related security and collateral agreements and (ii) the pledge and
granting of a security interest in the Mezzanine Borrower's direct and/or indirect ownership
162'019740-G013
$26MAI *Ia14*4 -3-
interests in Developer to and for the benefit of Junior Lender, all subject to Section 900 of the
Ground Lease.
4. ?he Agency approves the making of the Mezzanine Loan by Junior Lender, the
terms of such Mezzanine Loan and the execution, delivery and performance of all obligations set
forth in the Mezzanine Loan Documents by Developer.
S. Upon Agency's receipt of a notice from either Junior Lender or Senior Lender
pursuant to the terms of the DDA in connection with either of such lender's rights pursuant to the
DDA, Agency shall comply with the provisions of the DDA in connection with such notice.
6. Agency acknowledges the previous assignment to the Developer by Mayer of all
its right, title and interest in and to the DDA (as it relates to the Development Property) and the
Ground Lease and the execution and delivery by the Developer of the Ground Lease, is expressly
peratitted by Section 316(f) of the DDA and does not require the consent of the Agency. In
addition, the Agency hereby expressly approves and consents to (a) any subsequent transfer,
whether voluntary or involuntary, of membership interests in Mezzanine Borrower or Borrower
between Grand Resort, LLC ("GR') and Coast Beach, LLC ("CB'), two of the three original
members of the Mezzanine Borrower, so long as such transfer is pursuant to either CB cr GR
exercising its rights under Section 4.2(b), 4.6, 7.1 or 9.6 of the Mezzanine Borrower's Limited
Liability Company Agreement or pursuant to any corresponding provisions in Borrower's
Limited Liability Company Agreement, together with (i) any subsequent change in the share of
capital or profits held by OR or CB in the Mezzanine Borrower or Borrower from time to time,
( so long as such transfer is pursuant to either CB or OR exercising its rights under Section 4.2(b),
4.6, 7.1 or 9.6 of the Mezzanine Borrower's Limited Liability Company Agreement or pursuant
to any corresponding provisions in Borrower's Limited Liability Company Agreement, (ii) any
subsequent change in interests, capital or profits that results in CB becoming the managing
member of the Mezzanine Borrower or Borrower, so long as such transfer is pursuant to either
CB or OR exercising its rights under Section 4.2(b), 4.6, 7.1 or 9.6 of the Mezzanine Borrower's
Limited Liability Company Agreement or pursuant to any corresponding provisions in
Borrower's Limited Liability Company Agreement, and (iii) any subsequent change in the
ownership of shares in (x) SPE Resort Holding, Ir.c. ('•SPE Holding'), the third member of the
Mezzanine Borrower, or (y) SPE PCH Beach Resort, Inc. ("SPE Beach Resort'), which results
from any of the foregoing permitted transfers so long as SPE Holding's or SPE Beach Resort's
membership interest in the Developer does not increase as a result thereof, (b) the replacement of
Mezzanine Borrower as a member of Borrower in place of CB and GR, (c) the addition of CB,
GR and SPE Holding as members of the Mezzanine Borrower, (d) any transfers that result in the
transfer of membership interests to a third party so long as the existing members, b the
aggregate, retain a Controlling Interest in the Borrower or Mezzanine Borrower (the term
"Controlling interest" as used herein shall mean with respect to any entity, other than an
individual, (i) an ownership interest in Borrower or Mezzanine Borrower totaling in excess of
fifty percent [50%] of the voting and ownership interests of such entity, or (ii) control of the
management and day to day operations of such entity) and (e) a voluntary or involuntary sale,
exchange, conveyance or direct or indirect transfer of membership interests or "units* in either
CB or GR's limited liability company, or the creation or issuance of new membership interests or
"units" therein in one or a series of transactions, so long as the result is that an aggregate of at
least 51% of each such company's membership interests or "trots" shall be vested legally or
162101974C4013
5:6197.11 &IW14*4 -4-
beneficially in a party or parties who are now members of each of such companies. No such
transfers shall require any notice to the Agency or the taking of any act by the Developer or its
menibers as a condition to the effectiveness thereof, and Sections 316(a)-(c) and 316.1 of the
DDA shall be inapplicable to such transfers. Notwithstanding anything contained herein to the
contrary and the execution of this Agreement by Lender, the foregoing transfers of interests in
Borrower and/or Mezzanine Borrower shall remain subject to the terms and provisions of the
Senior Loan Documents and the Mezzanine Loan Documents, as applicable.
7. Agency acknowledges that on May 29, 2003, a Release of Construction
Covenants was recorded as Document No. 2003000624371 in the Official Records of Orange
County, California, and, pursuant to Section 317 of the DDA, the same constitutes evidence of
satisfactory completion of all construction and development related to the Development Property
and required under the DDA.
S. Agency acknowledges that the DDA was terminated with respect to the
Development Property as of the recordation of the Release of Construction Covenants, except as
set forth in Section 404 of the DDA.
9. - Agency acknowledges that Mayer and Agency have taken all actions required of
each under that certain, Amended and Restated Mobilehome Acquisition and Relocation
Agreement dated as of October 19, 1998 (which agreement is referred to in the DDA as the
"Driftwood Agreement').
10. Agency acknowledges that there are no defaults under the DDA with respect to
The Development Property as to the surviving provisions in Section 404 of the DDA, including
without limitation, Agency's payment obligations under the Schedule of Feasibility Gap
Payments.
11. Any notices and other communications permitted or required by the provisions of
this Agreement (except for telephonic notices expressly permitted) shall be in writing and shall
be deemed to have been properly given or served by depositing the same with the United States
Postal Service, or any official successor thereto, designated as Certified Mail, Return Receipt
Requested, bearing adequate postage, or deposited with reputable private courier or overnight
delivery service, and addressed -as hereinafter provided. Each such notice shall be effective upon
being deposited or delivered as aforesaid. • The time period within which a response to any such
notice must be given, however, shall commence to run from the date of receipt of the notice by
the addressee thereof. Rejection or other refusal to accept or the inability to deliver because of
changed address of which no notice was given shall be deemed to be receipt of the notice sent.
By giving to the other party hereto at least ten V 0) days' notice thereof, either party hereto shall
have the right from time to time to change its address and shall have the right to specify as its
address any other address within the United States of America. Each notice shall be addressed as
follows:
To the Senior Lender.
GMAC Commercial Mortgage Sank
6955 Union Park Center, Suite 330
36n]9740-MI3
$26197.11OW14104 - -
9
Midvale, UT 84047
Attn: Loan Notices (GMACCM Loan No. 01-1045911)
with a copy to:
Katten Muchin Zavis Rosentnan
1025 Thomas Jefferson Street, N.W.
East Lobby, Suite 700
Washington, D.C. 20007-5201
Attn: Christopher J. Hart, Esq.
To the Junior Lender:
GMAC Commercial Iviongage Corporation
5614 Westwood Center Drive, Suite 630
Vienna, Virginia 22182-2233
Attn: Morgan G. Earnest, 11,
Senior Vice President (GMACCM Loan No. 01-1045912)
GMAC Commercial Mortgage Corporation
200 Witmer Road
Horsham, Pennsylvania 19044
Atm. Mezzanine Loan Notices (GMACCM Loan No. 01-1045912)
with a copy to:
Katten Muchin Zavis Rosenman
1025 Thomas Jefferson Strect, N.W.
East Lobby, Suite 700
Washington, D.C. 20007-5201
Attn: Christopher J. Hart, Esq.
To the Agency:
Redevelopment Agency of the City of Huntington Beach
City Hall
2000 Main Street
Huntington Beach, California 92648
Attn: David Biggs, Director cfEconomic Development
ra�vwt.omrl -�
S2e�97-Ir alO1sA+
To the Developer.
PCH Beach Resort, LLC
c/o The Robert Mayer Corporation
State 1050
660 Newport Center Drive -
Newport Beach, California 92660
Attn: Robert L Mayer and Stephen Bone
with copy to:
Coast Beach, LLC
c/o Hyatt Development Corporation
200 West Madison Avenue
Chicago, Illinois 6060
Attn: Dale Moulton
12. The Agency acknowledges that it has been provided for its inspection and review
a copy of all of the Senior Loan Documents, all of the Mezzanine Loan Documents (a complete
list of which Senior Loan Documents and Mezzanine Loan Documents are attached hereto as
Exhibit " 'J, and the Intercreditor Agreement and approves the same.
13. Notwithstanding the place of execution of this instrument, the parties to this
instrument have contracted for California law to govern this instrument and it is controIlingly
agreed that this instrument is made pursuant to and shall be construed and governed by the laws
of the State of California without regard to the principles of conflicts of law.
14. This Agreement and each and every covenant, agreement and other provision
hereof shall be binding upon and shall inure to the benefit of the Lenders, the Developer, the
Agency and their respective successors and assigns.
15. The unenforceability or invalidity of any provisions hereof shall not render any
other provision or provisions herein contained unenforceable or invalid.
16. This Agreement may be executed in any number of counterparts which together
shall constitute one and the same instrument.
16y0M404013
576197.11 910014-44 -7-
ez
IN FURTHERANCE, this Agreement is executed as of the date first above written.
PCH BEACH RESORT, LLC, a California
limited liability company
By: PCH RESORT HOLDING, LLC,
a Delaware Iimited liability company,
Its: Managing Member
By: GRAND RESORT, LLC, a California
limited liability company,
Its: Managing Member
162919740-0013
526197,11 00 11M �5''
1:3y: RLM MANAGEMENT, INC., a California
corporation,
Its: Manager
By.
lYobert L. Mayer,
Its: President
PCH RESORT HOLDING, LLC,
a Delaware Iimited liability company,
By: GRAND RESORT, LLC, a California limited liability
company,
Its: Managing Member
By. RIM MANAGEMENT, INC., a California
corporation,
Its: Manager
13
obert L. Mayer,
Its: President
162.019740-00l7
$26197.11 a101111 4
19
Approved as to Form:
I001914o-m u
526197.11 a IWI 1/04
REDEVELOPMENT AGENCY OF THE CITY
OF HUNTINGTON BEACH, a public body,
corporate and politic
BY
Its: Executive Director
-I a -
.a
r STATE OF CALIFORNIA )
) ss
COUNTY OF
J
On_,'1~Tt.y
personally appeared
L1 . before me, 4.:
personally knov4m to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ics), and that by his/her/their
signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s)
acted, executed the instrument.
Witness my hand and official seal.
LOKM M. M(I SH
Commtufon 0 1430913
Notary MAC • coAtomin
[ SEAL) aonge County
My Comm. En*" hit
... STATE OF CALIFORNIA }
} ss
COUNTY OF ,r{ �''`� t l
i
Notary Public
On 101Ft her, I� ,=?CC'iI before me, f er'ePii /1l. Sviif� -
personally appeared _ iN t I? e7 t' 4 _ L. 1Y1e< _! er
personally known to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) islare subscribed to the v.7thin instrument and acknowledged to me that
he/shelthey executed the same in his/her/their authorized eapacity(ies), and that by his/herltheir
signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s)
acted, executed the instrument.
Witness my hand and official seal.
�.� -7
Notary Public
Commmion i 1l30913
[SE Nolory Public • cantomw
change county
®rMy Comm. Egwq& hl 15. 2007
t ezrot9?�o-00� s
SM197.11 41a11/0+ -14-
GMAC COMMERCIAL MORTGAGE BANK,
a Utah industrial bank
By:
BETH ANN HERRMANN
Its: SENIOR VICE PRESIDENT
162/019740-0013
526197.11 e10/11104
STATE OF CALIFORNIA )
)Ss
COUNTY OF ORANGE )
On October 14, 2004, before me, K. Copeland, personally appeared Penelope Culbreth
Graft personally known to me _ to be the
person() whose names) ishe subscribed to the within instrument and acknowledged to me that
Whhel executed the same in hWher heif authorized capacity, and that by hWherAheif
signature( on the instrument the person(s) o- the entity upon behalf of which the person(s)
acted, executed the instrument.
Witness my hand and official seal.
r, K. COPEtAND
CCMM. #140004
X(rARY PUBLIC • CALIFORNIA n
0 CRANGE COUM 0
?4�Y COMM. EXPIRES APRIL E. 2001 1
[SEAL)
Notary Pliblic
max>1 LIJv��f
} ss
COUNTY OF tiL �)
On 12 efore mew 1 Ctf t e— La-i
personally appeared r1
personally known to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) islare subscribed to the within instrument and acknowledged to me that
helshelthey executed the same in hislher/their authorized eapacity(ies), and that by his/her/their
signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s)
acted, executed the instrument.
Witness my hand and official seal.
[ SEAL]
147J014740.0013
5:6197.11 &IOMM
otary Public
-15-
COMMONWEALTHOiprp4jgj LVA:d1A
oirw r�rWFRIE uu�EAL
�oSn arc
Horsham 7wp., Wont Counly
My Conunission E,<pres �r>Qer �i,
GMAC COMMERCIAL MORTGAGE CO ORATION,
a California corporation
By:
Its: LM L. DE MIELD
167/019740-0013
526197.11 ■ 0/1IM4 -12-
r
STATE OF I )
) ss
COUNTY OF
personally known to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) islare subscribed to the within instrument and acknowledged to me that
he/she/thcy executed the same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s)
acted, executed the instrument.
Witness my hand and official seal.
I Y I WMART -Ulf
• i ,
[SEAL]
NZ019740013 _ 5.
3Pc197.11 a1&1IM4
Rsyo flobinson
NOTRRY PUBLIC
Commonwedth of Virglnto
Commission Ckpires 10131/08
EXMI "A"
DESCRIPTION DEVELOPMENT PROPERTY
All that certain land situated in the State of California, County of Orange, City of Huntington
Beach, and is described as follows:
Parcel A:
Lot I of Tract No. 15535, as shown on a map filed in Book 790, pages 44 to 50 inclusive of
Miscellaneous Maps, Records of Orange County, California
Parcel B:
A non-exclusive revocable license to utilize that certain area defined as "Grand Coast Resort
Improvement Area" in that certain "License Agreement to Provide Landscaping and Other
Improvements in the Public Right -Of -Way" ("Agreement') recorded April 18, 2001 as
Instrument No. 20010232765 of Official Records of Orange County, California, and delineated
on Exhibit "F"' attached thereto, for the installation, maintenance, repair and replacement of
landscaping and other improvements,- as said license is set forth in paragraph 2 of the Agreement.
1�
A non-exclusive revocable license to utilize that certain area defined as "Overcrossing
Improvement Area" in that certain "License Agreement to Provide Landscaping and Other
Improvements in the Public Right-Of-Wa}?' ("Agreement') recorded April 18, 2001 as
Instrument No. 20010232765 of Official Records of Orange County, California, and delincated
on Exhibit "G" attached thereto, for the installation, maintenance, repair and replacement of
overcrossing and other improvements, as said license is set forth in paragraph 2 of the
Agreement
EXHIBIT "B"
162.019740-0013
$26197.1111M1 TO LANDLORD'S RECOGNITION AGREEMENT
EXHIBIT,"B"
5E!�TI0R LOAN DOCUMENTS AND MEZZANINE LOAN D
1. Senior Loan Documents
a.
Deed of Trust Note;
b.
Leasehold Deed of Trust, Assignment of Leases and Profits, Security Agreement
and Fixture Filing;
C.
Assignment of Leases, Rents and Profits;
d.
Assignment of Contracts, Licenses, Permits, Agreements, Warranties and
Approvals;
C.
Guaranty of Recourse Obligations;
f.
Environmental Indemnity Agreement;
g.
Consent, Subordination and Recognition Agreement;
r-
'�.. h.
Replacement Reserve Agreement;
i.
Patriot Act Certificate;
j.
UCC Financing Statements (Orange County and California Secretary of State);
k.
Interest Pate Cap Agreement;
1.
Assigam-.nt of Interest Rate Cap
M.
Rate Cap Provider -Consent and Acknowledgement;
n.
Intercreditor Agreement; ,
o.
Agreement (Ground Lessor);
P.
Agreement (Development Agreement and Property Agreements);
q.
Agreement (Disposition and Development Agreement);
r.
Deposit Account Control Agreement
S.
Section 905.1 Notice to Ground Lessor
EXHIBIT, "F!''
TO ESTOPPEL AGREEMENT REGARDING DISPOSITION
161M9740-!2S 97.1 a141W AND DEVELOPMENT AGREEMENT
2. Mezzanine Loan Documents. _
a. Mezzanine Loan Agreement;
b, Mezzanine Note;
e. . Pledge and Security Agreement;
d. Patriot Act Certificate;
e. Assignment of Interest Rate Cap;
f ]fate Cap Provider -Consent and Acknowledgement;
g. Mezzanine Consent, Subordination and Recognition Agreement; and
h. OCC Financing Statements (Delaware)
16V01974W I3
5-6197,11 110rlVD4 '2`
GMAC Commercial Mortgage Bank
Katten Muchin Rosenman LLP
August �� 2005
Page 4
EXHIBIT "B"
Loan Documents
1. Amended and Restated Deed of Trust Note;
2. Amended and Restated Leasehold Deed of Trust, Assignment of Leases and Profits,
Security Agreement and Fixture Filing;
3. Amended and Restated Assignment of Leases, Rents and Profits;
4. Amended and Restated Assignment of Contracts, Licenses, Permits, Agreements,
Warranties and Approvals;
5. Amended and Restated Guaranty of Recourse Obligations;
6. Amended and Restated Environmental indemnity Agreement;
7. Amended and Restated Consent, Subordination and Recognition Agreement;
S. Amended and Restated Replacement Reserve Agreement;
9. Patriot Act Certificate;
10. UCC Financing Statements (Orange County and California Secretary of State);
11. Interest Rate Cap Agreement (S 115,000,000.00);
12. Amended and Restated Rate Cap Provider -Consent and Acknowledgement;
13. Amended and Restated Deposit Account Control Agreement; and
14. Section 905.1 Notice to Ground Lessor.
m
rK
j, Ie CITY OF HUNTINGTCN BEACH
2000 MAIN STREET CALIFORNIA 92648
August 10 , 2005
By -Federal Express
GMAC Commercial Mortgage Bank
6955 Union Park Center
Suite 330
Midvale, Utah 84047
Attn.: Loan Notices (GMACCM Loan No.1049864)
Katten Muchin Rosenman LLP
1025 Thomas Jefferson Street, N.W.
East Lobby
Suite 700
Washington, D.C. 20007-5201
Attn.: Christopher J,. Hart, Esq.
Re: Confirmation of FstopMl_Agreement Regarding Ground Lease
Dear Sirs:
By execution of this letter, the undersigned hereby acknowledges that the Estoppel Agreement
Regarding Ground Lease, dated as of October 15, 2004 ("Est_ oppel") and attached hereto as
Exhibit "A" and entered into by and among the Redevelopment Agency of the City of
Huntington Beach C" enc ' ), PCH Beach Resort, LLC ("Dev� eloper'), PCH Resort Holding,
LLC ("Mezzanine Borrower"), GMAC Commercial Mortgage Bank ("Senior-- Lender") and
GMAC Commercial Mortgage Corporation ("Junior Lender") remains in full force and effect.
Subject to the modifications noted below, there are no changes to the information and the
representations made by the Agency contained in the Estoppel:
The Agency acknowledges that the Mezzanine Loan, as defined in the Estoppel,
will be paid in full and the amount of the Senior Loan increased to
$l 15,000,000.00 as agreed to by Developer, Mezzanine Borrower, Senior Lender
and Junior Lender (the "Loan"). As a result, any reference to "Junior Lender",
"Mezzanine Loan", "Mezzanine Borrower", "Pledge Agreement", "Mezzanine
Loan Documents", "Mezzanine Loan Agreement", "Intercreditor Agreement", or
"Mezzanine Note" in the Estoppel shall no Ionger apply. Any reference to "Deed
of Trust" shall mean that certain Amended and Restated Leasehold Deed of Trust,
Assignment of Rents and Profits, Security Agreement and Fixture Filing executed
by the Developer in connection with the Loan.
2. The Agency acknowledges and agrees that Exhibit "B" to the Estoppel shall be
replaced with the document attached hereto as Exhibit "B" to this letter.
GMAC Commercial Mortgage Bank
Katten Muchin Rosenman LLP
August 10 , 2005
Page 2
I The Agency acknowledges that Senior Lender will rely on this letter in making
the Loan.
Sincerely yours,
itle: E ecutive Direct r
Redevelopment Agency of the City of Huntington Beach,
a public body, corporate and politic
Attachment
cc: Mr. Renzo Aida (GMACCM)
State of California
County of Orange
before me, K. Copeland _, personally appeared
Penelope Culbreth-Graft known to me to be the person whose name is subscribed to the
within instrument and acknowledged to me that she executed the same in her authorized capacity, and
that by her signature on the instrument the person, or the entity Upon behalf of which the person acted,
executed the instrument.
K. 60PELAND
r COMM. #t405904
oOWY
NOTARY PUBLIC•CALIFORNIA
POFULNGE COUNTY
COMM. E-VI;ES AFAIL S. 2007 71
WITNESS my hand and official seal.
I / �
Mi
GMAC Commercial Mortgage Bank
Katten Muchin Rose=an LLP
August 10 , 2005
Page 3
EXHIBIT "A"
Estoppel
(see attached)
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Katten Muchin Zavis Rosenman
1025 Thomas Jefferson Street, N.W.
East Lobby, Suite 700
Washington, D.C. 20007-5201
Attention. CMstopherJ. Hart, Esq.
(Space Above For Recorder's Use)
ESTOPPEL AGREEMENT REGARDING GROUND LEASE
THIS ESTOPPEL AGREEMENT REGARDING GROUND LEASE ("Agreement") is
made and entered into as of the - day of �06c 2004, by and among the
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body,
corporate and politic {herein the "Agency" ); PCH BEACH RESORT, LLC, a California limited
liability company (`Developer"); PCH RESORT HOLDING. LLC, a Delaware limited liability
company ("Mezzanine Borrower'), GMAC COMMERCIAL MORTGAGE BANK, a Utah
industrial bank (together with its successors and assigns, "Senior Lenderl; and GMAC
COMMERCIAL MORTGAGE CORPORATION, a California corporation (together.with its
successors and assigns, "Junior Lender").
,. 1
A. The Agency and Mayer Financial, L.P., as developer {"Mayer") have entered into
sit Amended and Restated Disposition and Development Agreement dated as of September 14,
1998 ("Original Agreement'), as amended by that certain First Implementation Agreement to
Amended and Restated Disposition and Development Agreement dated as of May 15. 2000
("First Implementation Agreement') and as further amended by Second Implementation
Agreement to Amended and Restated Disposition and Development Agreement dated as of
February5, 2001 ("Second Implementation Agreement") (the Original Agreement as amended
by the First Implementation Agreement and Second Implementation Agreement being herein
referred to as the "DDA') pursuant to which the Agency has acquired the Development Property
as described in Exhibit "A" attached hereto {"Development Property").
B. The Developer has acquired the interest of Mayer in the DDA insofar as the DDA
relates to and affects the Development Property pursuant to that certain Assignment and
Assumption Agreement and Consent to Assignment dated April3. 2001. The Agency has
consented to such acquisition and acknowledged and agreed that for purposes of the
development of the Development Property the Developer shall be the "developer" of the same as
set forth in the DDA and is entitled to all of the benefits of the "developer" under the DDA
insofar as it affects or relates to the Development Property.
rssol#74awWU
5.139=13 ARY14/04
C. In furtherance of the DDA and in order to construct the required improvements on
the Development Property, the Agency, as landlord, and the Developer, as lessee, have executed
and delivered that certain Ground Lease dated April, 2001, a Memorandum of which was
recorded on April18, 2001, as Document No.20010232769 in the Office of the County
Recorder, Orange County, California, pursuant to which the Agency has leased the Development
Property to Developer ("Ground Lease").
D. Pursuant to the terms of the Ground Lease, the Developer has agreed to construct
on the Development Property and operate either itself or through a hotel manager a resort hotel
of approximately 519 keyed guest rooms, a conference center and other amenities ("Resort Hotel
Project!).
E. The Developer obtained a bridge loan from Senior Lender on or about May 29,
2003, in the original principal amount of Eighty -Five Million and No/)DO Dollars
($85,000,000.00) (the `Bridge Loan') to refinance a construction loan. In furtherance thereof,
Developer and Senior Lender entered into certain loan documents wherein Senior Lender
disbursed the Bridge Loan, or portions thereof, to Developer under the conditions contained
therein.
F. Developer has obtained from Senior Lender a commitment for a senior loan (the
`senior Loan') in the maximum principal amount of Ninety -Five Million and No/I00 Dollars
(S95,000,000.00) and in connection therewith the Developer will execute and deliver to Senior
Lender its deed of trust encumbering and conveying the Developer's interest in the Resort Hotel
Project as security for the Senior Loan. In furtherance thereof, Developer and Senior Lender
have entered into or mill enter into certain loan documents ("Senior Loan Documents') wherein
Senior Lender shall 'disburse the Senior Loan, or portions thereof to Developer under the
conditions contained therein.
G. To evidence the Senior Loan, the Developer will be executing and delivering to
Senior Lender its Deed of Trust Note in the amount of the Senior Loan (herein the `senior
Note).
H. As security for the repayment of the Senior Note, among other collateral
documents, the Developer has or will be executing and delivering to Fidelity National Title
Company, as trustee, for the benefit of Senior Lender its Leasehold Deed of Trust, Assignment
of Rents and Profits, Security Agreement, and Fixture Filing of even date herewith (herein the
"Deed of Trust") conveying the Development Property• in trust to Fidelity National Title
Company, as trustee, for the benefit of the Senior Lender.
I. Junior Lender has entered into a commitment to make a mezzanine Ioan (the
"Mezzanine Loan') to Mezzanine Borrower, the sole managing member of Developer, in the
maximum principal amount of Twenty Million and No/100 Dollars (S20,000,000.00) and in
connection therewith the Mezzanine Borrower will execute and deliver to Junior Lender, among
other collateral docurr.ents, its pledge and security agreement (the "Pledge Agreement') creating
a security interest in Mezzanine Borrower's direct and/or indirect ownership interests in
Developer, which security interest is in favor of Junior Lender and is security for the Mezzanine
Loan. In furtherance thereof, Mezzanine Borrower and Junior Lender have entered into or will
5339M.13 IIG'I4*' -2-
n
enter into certain loan documents ("Mezzanine Loan Documents"), including, without limitation,
a loan agreement (the "Mezzanine Loan Agreement') wherein Junior Lender shall disburse the
Mezzanine Loan, or portions thereof, to Mezzanine Borrower under the conditions contained
therein, and an intercrcditor agreement with Senior Lender (the "Intercreditor Agreement").
I To evidence the Mezzanine Loan, the Mezzanine Borrower will be executing and
delivering to Junior Lender a promissory note in the amount of the Mezzanine Loan (herein the
"Mezzanine Note").
K. The proceeds of the Senior Loan and the Mezzanine Loan wiU be used to
refinance the Bridge Loan and repay other existing loans and preferred equity affecting the
Development Property.
L. The parties are executing this Agreement for the purpose of setting forth certain
understandings with respect to the mortgaging of the leasehold estate created under the Ground
Lease.
NOW THEREFORE, in consideration of the making of the Senior Loan and the
Mezzanine Loan it is agreed as follows:
1. The aforesaid Recitals are incorporated herein.
2. A true and correct copy of the Ground Lease is on file with the City of Huntington
Beach.
I The Ground Lease remains in full force and effect in accordance with its terns
and together with the DDA constitutes the entire agreement between the Agency and Developer
with respect to the leasing of the Development Property and:
(a) The Ground Lease has not been modified, supplemented or amended in
any respect.
(b) Except for the Ground Lease and the DDA, there are no other agreements
or understandings. whether written or oral, between Developer and
Agency with respect to the Ground Lease or the Development Property.
(c) Neither Agency nor, to the best of Agency's knowledge, Developer, has
assigned the Ground Lease or sublet the Development Property.
(d) As of the date hereof there are no defaults under the Ground Lease by
Agency.
(c) 71c rent and all other payments due to Agency under the Ground Lease
are current in all respects.
(� Agency has not received written notice of any pending eminent domain
proceedings or other governmental actions or judicial actions against
either Agency's or Developer's interest in the Development Property,
162419740-M13
523900.13 IMM01 -3-
NL
f. .
` including, without limitation, actions relating to violations of any
environmental laws, and Agency has no reason to believe that there are
grounds for any claim of any such action.
(g) The "Operating Con=cnccment Date" under the Ground Lease is
January 19, 2003.
4. The Agency is the current holder of the landlord's interest in the Ground Lease
and has not assigned or transferred its interest in the Ground Lease to any other person or entity
nor has it mortgaged, encumbered or otherwise subjected its interest in the Ground Lease to the
lien of any security instrument which has priority over the rights of the Developer under the
Ground Lease.
5. The Agency acknowledges (i) that the Developer is executing and delivering to
Senior Lender the aforesaid Deed of Trust encumbering and conveying the Developer's interest
in the Ground Lease as security for the aforesaid Senior Loan and (ii) that Mezzanine Borrower
is executing and delivering to Junior Lender the aforesaid Pledge Agreement creating a security
interest in the Mezzanine Borrower's direct and/or indirect ownership interests in Developer,
which security interest is in favor of Junior Lender, and, to the extent the consent of the Agency
is required for such acts on the part of the Developer, the Agency consents to the same including
(i) the mortgaging and conveying of the Developer's leasehold estate in the Ground Lease, the
leasehold improvements and related security and collateral agreements and (ii) the pledge and
granting of a security interest in the Mezzanine Borrower's direct and/or indirect ownership
interests in Developer to and for the benefit of Junior Lender, all subject to Section 900 of the
Ground Lease.
6. In accordance with Section 502 of the Ground Lease the Agency has approved the
Hotel Management Agreement dated April 11, 2001, between the Developer, as owner, and
Hyatt Corporation, as manager, and has approved Hyatt Corporation as the manager.
7. The Agency acknowledges that the requirement of Section 503 of the Ground
Lease that the Agency approve an "Original Franchise Agreement" is satisfied by the execution
and delivery of the Hotel Management Agreement with Hyatt Corporation and that there will be
no separate Franchise Agreement with respect to the Resort Hotel Project.
S. The Agency acknowledges that in accordance with Section 901 of the Ground
Lease that each of the Senior Lender and the Junior Lender (collectively, the Lenders') are
approved as a "responsible bona fide institutional Icnder' and as a leasehold mortgagee under the
Ground Lease and approves the making of the Senior Loan by the Senior Lends and the
execution and delivery of the Deed of Trust on the leasehold estate.
9. The Agency approves the making of the Mezzanine Loan by Junior Lender, the
terms of such Mezzanine Loan and the execution, delivery and performance of all obligations set
forth in the Mezzanine Loan Documents by Developer.
10. In accordance with Section 902 of the Ground Lease the Agency agrees that each
of the Lenders is an approved "Mortgagee" within the terms and conditions of Section 900 of the
Ground Lease, shall to entitled to all the rights and burdened with all of the obligations of a
161119740-001] .4«
523900.13 o70114M
"Mortgagee' under the Ground Lease (even though Junior Lender does not hold a deed of trust)
including those contained in Section 902, upon a trustee's sale or foreclosure of the Dees! of
Trust or deed in lieu thereof shall recognize Senior Lender as tenant in accordance with Section
902 of the Ground Lease and shall provide in accordance with Section 902 the services of
landlord for the benefit of Senror Lender, its successors and assigns, and upon a UCC foreclosure
under the Pledge Agreement or assignment in lieu thereof shall recognize Junior Lender as tenant
in accordance with Section 902 of the Ground Lease and shall provide in accordance with
Section 902 the services of landlord for the benefit of Junior Lender, its successors and assigns.
Upon Agency's receipt of a notice from either Junior Lender or Senior Lender pursuant to the .
terms of the Ground Lease in connection with either of such lender's rights pursuant to Article
900 of the Ground Lease, Agency shall comply with the provisions of the Ground Lease in
cormection with such notice.
]I. Pursuant to Section 1316(3) of the Ground Lease the Agency acknowledges that;
(a) 'foreclosure of a mortgage or deed of trust encumbering Agency's fee
interest in the Development Property shall not terminate or disturb the
rights of the tenant under the Ground Lease, or the rights of any leasehold
mortgagee or other lender, including the Lenders, so long as tenant or such
leasehold mortgagee is not then in default (after applicable notice and cure
periods) under the Ground Lease; and
(b) Agency shall cause a copy of any written default notices sent by a fee
mortgagee to Agency to be sent to the tenant under the Ground Lease and
such leasehold mortgagee and other lender, including Lenders.
12. The Agency shall provide Lenders with any notices that it is required to provide
to Lenders, as mortgagees, under the Ground Lease, including, without limitation, those notices
to be provided under Section 904 of the Ground Lease.
13. Agency acknowledges the previous assignment to the Developer by Mayer of all
its right, title and interest in and to the Ground Lease. In addition, the Agency hereby expressly
approves and consents to (a) any subsequent transfer, whether voluntary or involuntary, of
membership interests in Mezzanine Borrower or Borrower between Grand Resort, LLC CGR')
and Coast Beach, LLC ("CB'), two of the three original members of the Mezzanine Borrower, so
long as such transfer is pursuant to either CB or GR exercising its rights under Section 42(b),
4.6, 7.1 or 9.6 of the Mezzanine Borrower's Limited Liability Company Agreement or pursuant
to any corresponding provisions in Borrower's Limited Liability Company Agreement, together
with (i) any subsequent change in the share of capital or profits held by GR or CB in the
Mezzanine Borrower or Borrower from time to time, so long as such transfer is pursuant to either
CB or GR exercising its rights under Section 4.2(b), 4.6, 7.1 or 9.6 of the Mezzanine Borrower's
Limited Liability Company Agreement or pursuant to any corresponding 'provisions in
Borrower's Limited Liability Company Agreement, (ii) any subsequent change in interests,
capital or profits that results in CB becoming the managing member of the Mezzanine Borrower
or Borrower, so long as such transfer is pursuant to either CB or GR exercising its rights under
Section 4.2(b), 4.6, 7.1 or 9.6 of the Mezzanine Borrower's Limited Liability Company
Agreement or pursuant to any corresponding provisions in Borrower's Limited Liability
162MI9740-0013
521900.11 &IWW" -5-
rr
Company Agreement, and (iii) any subsequent change in the ownership of shares in (x) SPE
Resort Holding, Inc. ("SPE Holding), the third member of the Mezzanine Borrower, or (y) SPE
PCH Beach Resort, Inc. {"SPE Beach Resort"), which results from any of the foregoing
permitted transfers so Iong as SPE Holding's or SPE Beach Resort's membership interest in the
Developer does not increase as a result thereof, (b) the replacement of Mezzanine Borrower as a
member of Borrower in place of CB and GR, (c) the addition of CB, GR and SPE Holding as
members of the Mezzanine Borrower, (d) any transf: rs that result in the transfer of membership
interests to a third party so long as the existing members, in the aggregate, retain a Controlling
Interest in the Borrower or Mezzanine Borrower (the tern "Controlling Interest" as used herein
shall mean with respect to any entity, other than an individual, (i) an ownership interest in
Borrower or Mezzanine Borrower totaling in excess of fifty percent (50%] of the voting and
ownership interests of such entity, or (ii) control of the management and day to day operations of
such entity) and (e) a voluntary or involuntary sale, exchange, conveyance or direct or indirect
transfer of membership interests or "units" in either CB or OR's limited liability company, or the
creation or issuance of new membership interests or "units" therein in one or a series of
transactions, so long as the result is that an aggregate of at least 51% of each such company's
membership interests or "units" shall be vested legally or bcnchcially in a party or parties who
are now members of each of such companies. No such transfers shall require any notice to the
Agency or the taking of any act by the Developer or its members as a condition to the
effectiveness thereof, and Sections 802 and 803 of the Ground Lease shall be inapplicable to
such transfers. Notwithstanding anything contained herein to the contrary and the execution of
this Agreement by Lender, the foregoing transfers of interests in Borrower and/or Mezzanine
Borrower shall remain subject to the terms and provisions of the Senior Loan Documents and the
Mezzanine Loan Documents, as applicable.
14. For purposes of Section I ON of the Ground Lease the Agency acknowledges that
the amount of the deductible as to any required earthquake insurance will take into account such
earthquake insurance as is available at commercially reasonable rates.
15. As a permitted Mortgagee, each of the Lenders shall be entitled to all the rights,
benefits and privileges afforded to a Mortgagee under Sections 902 through 912 of the Ground
Lease.
16. Agency acknowledges that on May 29, 2003, a Release of Comswction
Covenants was recorded as Document No. 2003000624371 in the Official Records of Orange
County, California, and, pursuant to Section 804 of the Ground Lease, the same constitutes
evidence of satisfactory completion of all construction and development related to the
Development Property and required under the Ground Lease.
17. Any notices and other communications permitted or required by the provisions of
this Agreement (except for telephonic notices expressly permitted) shall be in writing and shall
be deemed to have been properly given or served by depositing the same with the United States
Postal Service, or any official successor thereto, designated as Certified Mail, Return Receipt
Requested, bearing adequate postage, or deposited with reputable private courier or overnight
delivery service, and addressed as hereinafter provided. Each such notice shall be effective upon
being deposited or delivered as aforesaid. The time period within which a response to any such
notice must be given, however, shall commence to run from the date of receipt of the notice by
1620197460013
1239W. 13 &1&34104
the addressee thereof. Rejection or other refusal to accept or the inability to deliver because of
changed address of which no notice was given shall be deemed to be receipt of the notice scot.
By giving to the other party hereto at least ten (10) days' notice thereof, either party hereto shall
have the right from time to time to change its address and shall have the right to specify as its
address any other address within the United States of America. Each notice shall be addressed as
follows:
To the Senior Lender.
GMAC Commercial Mortgage Bank
6955 Union Park Center, Suite 330
Midvale, UT 84047
Attn: Loan Notices (GMACCM Loan No. 01-1045911)
with a copy to:
Katten Muchin Zavis Rosenman
1025 Thomas Jefferson Street, N.W.
East Lobby, Suite 700
Washington, D.C. 20007-5201
Attn: Christopher J. Hart, Esq.
To the Junior Lender:
GMAC Commercial Mortgage Corporation
8614 Westwood Center Drive, Suite 630
Vienna, Virginia 22182-2233
Attu Morgan G. Earnest.11,
Senior Vice President (GMACCM Loan No. 01-1045912)
GMAC Commercial Mortgage Corporation
200 Witmer Road
Horsham, Pennsylvania 19044
Attn: Mezzanine Loan Notices (GMACCM Loan No. 01-1045912)
with a copy to:
Katten Muchin Zavis Rosenman
1025 Thomas Jefferson Street, N.W.
East Lobby, Suite 700
Washington, D.C. 20007-5201
Alin: ChristopherJ. Hart, Esq.
:62,019740MI3
5779W.:3,1auro+ -7-
To the Agency:
Redevelopment Agency of the City of Huntington Beach
City Hall
2000 Main Street
Huntington Beach, California 92648
Attn: David Biggs, Director of Economic Development
To the Developer:
PCH Beach Resort, LLC
clo The Robert Mayer Corporation
Suite I050
660 Newport Center Drive
Newport Beach, California 92660
Attn: Robert L. Mayer and S-ephen Bone
with copy to:
Coast Beach, LLC
clo Hyatt Development Corporation
200 West Madison Avenue
Chicago, Illinois 6060
Attn: Dale Moulton
18. The Agency acknowledges that pursuant to the terms of the documents governing
the Senior Loan and the Mezzanine Loan, the Developer and the Mezzanine Borrower has
conveyed, granted and assigned to Lenders all of the Developer's right to amend, cancel, modify,
alter, terminate or surrender the Ground Lease and the Agency shall abide by the restrictions on
amendment, cancellation, modification, alteration, termination or surrender contained in Section
90S of the Ground Lease.
19. The Agency acknowledges that it has been provided for its inspection and review
a copy of all of the Senior Loan Documents, all of the Mezzanine Loan Documents (a complete
list of which Senior Loan Documents and Mezzanine Loan Documents arc attached hereto as
Exhibit " 'I and the intercrcditor Agreement and approves the same.
20. The Agency shall provide to the Lenders estoppel certificates in conformity with
Section 908 of the Ground Lease from time to tune upon reasonable request and without charge
certifying such correct information as the Lenders may reasonably request.
21. Notwithstanding the place of execution of this instrument, the parties to this
instrument have contracted for California law to govern this instrument and it is controllingly
agreed that this instrument is made pursuant to and shall be construed and governed by the laws
of the State of California without regard to the principles of conflicts of Iaw.
167,019140all
7379W.13 AW14 ���
22. This Agreement and each and every covenant, agreement and other provision
hereof shall be binding upon and shall inure to the benefit of the Lenders, the Developer, the
Agency and their respective successors and assigns.
23. The unenforceability or invalidity of any provisions hereof shall not render any
other provision or provisions herein contained unenforceable or invalid. _
24. This Agreement may be executed in any number of counterparts which together
shall constitute one and the same instrument.
IN FURTHERANCE, this Agreement is executed as of the date first above written.
PCH BEACH RESORT, LLC, a California
limited liability company,
By: PCH RESORT HOLDING, LLC,
a Delaware limited liability company,
Its: Managing Member
By: GRAND RESORT, LLC, a California
limited liability company,
Its: Managing Member
By: RLM MANAGEMENT, INC., a California
corporation,
Its: Manager
By: ,
ot; L. Mayer,
Its: President
16"19740.0013
523900.13 4103 1104 -9-
u
162/019740.0013
523900.13 &1W1 W
PCH RESORT HOLDING, LLC,
a Delaware limited liability company,
By: GRAND RESORT, LLC, a California limited liability
company.
Its: Managing Member
By: RLM MANAGEMENT, INC., a California
corporation,
Its: Manager
y �
By:
o crt L. Mayer,
Its: President
- l C6
STATE OF CALIFORNIA }
) ss
COUNTY OF : rtc 0,1 e )
On rY--r ia, accr
personally appeared
before me, �,r 2e*A PA.
•
personally known to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that
helshe/they executed the same in his/her/their authorized capacity(ics), and that by his/her/their
signature(s) on the instrument the person(s) or the entity upon behalf of which the persons)
acted, executed the instrument. ,
Witness my hand and official seal.
'/' J`-if f
GO Lo� M s otarypublic
ComnlicWon #� a�sogt3
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a«'o° county
[SEAL) MyCo+nm.ExpreslullS.7t!'
STATE OF CALIFORNIAOM }
) ss
COUNTY OF
On C: �� C �?�r 1 z.:GC�1 , before me, _.1rt_ J'�''� , �,'►� A
personally appeared �i� r 1. r;-�' 1-. Pel:-'I er
personally known to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that
helshelthey executed the same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s)
acted, executed the instrument.
Witness my hand and official seal.
�� ��G Jam, `), •s,���
Notary Public
tart7a �, i�
cann�k+�or, at 1 t304t 3
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162O19740401 ]
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REDEVELOPMENT AGENCY OF THE CTTY
OF HUNTINGTON BEACH, a public body,
corporate and politic
By -
Its: Executive Director
Approved as to Form:
IS A envy Gene 1 Counsel A0j
nnroved-s�to Form:
Kane Balykcr & Bdrk.TwW,
Agency cial Counsel
I GM 19740=13
$23900.13 a I W1 I IN `l —
STATE OF CALIFORNIA )
) ss
COUNTY OF ORANGE )
On October 14, 2004, before me, K. Copeland, personally appeared Penelope Culbreth
Graft personally knovrn to me Eef pr-eved te-me en Ae to be the
person(s) whose names) isAh-e subscribed to the within instrument and acknowledged to me that
WsheAhey executed the same in hisAherAheif authorized capacity6es), and that by hi4herlheif
signatures) on the instrument the person} or the entity upon behalf of which the person
acted, executed the instrument.
Witness my hand and official seal.
COPE AND
CCMM. 01406904
V a NVARYP�'OLIC • CALIFORNIA
ORAI;LE COUNTY n
MyCoVM.EXPIRES APRIL$.2007 �
[SEA-]
Notary Publ'
1621019740-0013
523900.13 a10/11/04
GMAC COMMERCIAL MORTGAGE BANK,
a Utah industrial bank
By: A,1-�
BETH ANN HERRMANN
Its: SENIOR VICE PRESIDENT
-12-
C
) ss
COUNTY OF AkL
On iZ , before
personally aped
personally known to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capaeity(ies), and that by his/her/their
signature(s) on the instrument the person(s) or the entity upon'behalf of which the person(s)
acted, executed the instrument.
Witness my hand and official seal.
[SEAL)
Ib2.007"1
5279M.1381011 ilW
.I VrL-L' A, 10 ,
Notary Public
-4-
COMMONWEALTH OF PENN;TLVAP&A
NOTARIAL SEAL
DINA MARIE LAURO, Notary P tft
Horshatm Up, Morn Coin► T
COmr�isston E,pres rt�ber T3.
GMAC COMMERCIAL MORTGAGE CORPORATION,
a California corporation 1
/ A
i r
Its: LEWIS L. DELAFIELD
1621019740-0013
523900.13 a10111/04
I
STATE OF Vi raini )
ss
COUNTY OF 1�&)� )
Ong
personally appeared
personally known to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s)
acted, executed the instrument.
Witness my hand and official seal.
ftya p4busOA
ISM] NOMN P'=
Carraw w aM of ftinlo
Commisslon Gfku IC01/08
162419740-MB . 15-
$36197.11 sla l IA4
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DESCRIPTION DEVELOPMENT PROPERTY
All that certain land situated in the State of,California, County of Orange, City of Huntington
Beach, and is described as follows:
ENSel A:
Lot 1 of Tract No. 15535, as shown on a map filed in Book 790, pages 44 to 50 inclusive of
Miscellaneous Maps, Records of Orange County, California
Parcel •
A non-exclusive revocable license to utilize that certain area defined as "Grand Coast Resort'
Improvement Area" in that certain "License Agreement to Provide Landscaping and Other
Improvements in the Public Right -Of -Way" ("Agreement") recorded April 18, 2001 as
Instrument No. 20010232765 of Official Records of Orange County, California, and delineated
on Exhibit "F" attached thereto, for the installation, maintenance, repair and replacement of
landscaping and other improvements, as said license is set forth in paragraph 2 of the Agreement.
Parcel C-
�- A non-exclusive revocable license to utilize that certain area defined as "Overerossing
Improvement Area" in that certain "License Agreement to Provide Landscaping and Other
Improvements in the Public Right -Of -Way" ("Agreement'l recorded April 18, 2001 as
Instrument No. 20010232765 of Official Records of Orange County, California, and delineated
on Exhibit "G" attached thereto, for the installation, maintenance, repair and replacement of
overcrossing and other improvements, as said license is set forth in paragraph 2 of the
Agreement.
ExH)B1T "A'°
TO ESTOPPEL AGREEMENT REGARDING GROUND
:621DI97I04013 LEASE
V3900.13 i M ANr
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Ma a• �•�i lat. •' a��ll�
1. Senior Loan Documents
a. Deed of Trust Note;
b. Leasehold Deed of Trust, Assignment of Leases and Profits, Security Agreement
and Fixture Filing;
C.
Assignment of Leases, Rents and Profits;
d.
Assignment of Contracts, Licenses, Permits, Agreements, Warranties and
Approvals;
C.
Guaranty of Recourse Obligations;
f
Environmental Indemnity Agreement;
g.
Consent, Subordination and Recognition Agreement;
(
`. h.
Replacement Reserve Agreement;
i.
Patriot Act Certificate;
j.
UCC Financing Statements (Orange County and California Secretary of State);
k.
Interest Fate Cap Agreement;
1.
Assignment of Interest Rate Cap
M.
Rate Cap Provider -Consent and Acknowledgement;
n.
Intercreditor Agreement;
o. Agreement (Ground Lessor);
p. Agreement (Development Agreement and Property Agreements);
q. Agreement (Disposition and Development Agreement); and
r. Deposit Account Control Agreement
S. Section 905.I Notice to Ground Lessor
EXHIBIT 'BN
TO ESTOPPEL AGREEMENT REGARDING GROUND
s23agoa�s9 .M ..ti+ LEASE
ia•�
2, Mezzanine Loan Documents.
a. Mezzanine Loan Agreement;
b. Mezzanine Note;
C. Pledge and Security Agreement;
d. Patriot Act Certificate;
e. , Assignment of Interest Rate Cap;
f Rate Cap Provider -Consent and Acknowledgement;
g. Mezzanine Consent, Subordination and Recognition Agreement; and
h. UCC Financing Statements (Delaware)
162919740-M13
32390o.0 I Id1 W1 -2-
1 . •
GMAC Commercial Mortgage Bank
Katten Muchin Rosenman LLP
August , 2005
Page 4
EXIIIBIT KB"
Loan Documents
1. Amended and Restated Deed of Trust Note;
2. Amended and Restated Leasehold Deed of Trust, Assignment of Leases and Profits,
Security Agreement and Fixture Filing;
3. Amended and Restated Assignment of Leases, Rents and Profits;
4. Amended and Restated Assignment of Contracts, Licenses, Permits, Agreements,
Warranties and Approvals;
5. Amended and Restated Guaranty of Recourse Obligations;
6. Amended and Restated Environmental Indemnity Agreement;
7. Amended and Restated Consent, Subordination and Recognition Agreement;
8. Amended and Restated Replacement Reserve Agreement;
9. Patriot Act Certificate;
10. UCC Financing Statements (Orange County and California Secretary of State);
11. Interest Rate Cap Agreement (SI15,000,000.00);
12. Amended and Restated Rate Cap Provider -Consent and Acknowledgement;
13. Amended and Restated Deposit Account Control Agreement; and
14. Section 905.1 Notice to Ground Lessor.
FJ
� CITY OF HUNTINGTON BEACH
2000 MAIN STREET CALIFORNIA 92648
August 0 , 2005
BY Federal Express
GMAC Commercial Mortgage Bank
6955 Union Park Center
Suite 330
Midvale, Utah 84047
Attn.: Loan Notices (GMACCM Loan No.1049864)
Katten Muchin Rosenman LLP
1025 Thomas Jefferson Street, N.W.
East Lobby
Suite 700
Washington, D.C. 20007-5201
Attn.: Christopher J,. Hart, Esq.
Re: Confirmation of Estoppel Agreement RegardingDevelopment evelopment Agreement and Pronerty
Amements
Dear Sirs:
By execution of this Ietter, the undersigned hereby acknowledges that the Estoppel Agreement
Regarding Development Agreement and Property Agreements, dated as of October 15, 2004
C' sto el") and attached hereto as Exhibit "A" and entered into by and among the City of
Huntington Beach ("City'), PCH Beach Resort, LLC ("Dev_eloper'), PCH Resort Holding, LLC
("Mezzanine Borrower'), GMAC Commercial Mortgage Bank ("Senior Lender') and GMAC
Commercial Mortgage Corporation ("Junior Lender") remains in full force and effect. Subject to
the modifications noted below, there are no changes to the information and the representations
made by the City contained in the Estoppel:
I . The City acknowledges that the Mezzanine Loan, as defined in the Estoppel,
will be paid in full and the amount of the Senior Loan increased to
$ I 15,000,000.00 as agreed to by Developer, Mezzanine Borrower, Senior Lender
and Junior Lender (the "Loan"). As a result, any reference to "Junior Lender",
"Mezzanine Loan", "Mezzanine Borrower", "Pledge Agreement", "Mezzanine
Loan Documents", "Mezzanine Loan Agreement", "Intercreditor Agreement", or
"Mezzanine Note" in the Estoppel shall no longer apply. Any reference to "Deed
of Trust" shall mean that certain Amended and Restated Leasehold Deed of Trust,
Assignment of Rents and Profits, Security Agreement and Fixture Filing executed
by the Developer in connection writh the Loan.
L,
GM AC Commercial Mortgage Bank
Katten Muchin Rosenman LLP
August 10 , 2005
Page 2
2. The City acknowledges that Senior Lender will rely on this letter in making
the Loan.
Sincerely yours,
Z— C, �v
itle: CiA:y Admi_nistrat Pr
The City of Huntington Beach,
a public body, corporate and politic
Attachment
cc: Mr. Renzo Aida (GMACCM)
State of California
County of Orange
O� %Q d Z—' before me, K, Copeland , personally appeared
Penelone ulbreth-Graft known to me to be the person whose name is subscribed to the
within instrument and acknowledged to me that she executed the same in her authorized capacity, and
that by her signature on the instrument the person; or the entity upon behalf of which the person acted,
executed the instrument.
K. COPELAND
�. ,.
V COMM. 0140-0904
V a NOTARY PUBLIC • CALIFO;NIA
0
F, ORANGE COUhTf
WCOMM. EXPIRES APRlL B. M7
WITNESS my hand and official seal.
GMAC Commercial Mortgage Bank
Katten Muchin Rosenman LLP
August 10 , 2005
Page 3
EXHIBIT "A"
Estoppel
(see attached)
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Katten Muchin Zavis Rosennian
1025 Thomas Jefferson Street, N.W.
Fast Lobby, Suite 700
Washington, D.C. 20007-5201
Attention: Christopher J. Hart, Esq.
(Space Above For Recorder's Use)
ESTOPPEL AGREEMM REQAARDING DEVELOPMENT AGREEManAM
PROPERTY AGREEMENTS
THIS ESTOPPEL AGREEMENT REGARDING DEVELOPMENT AGREEMENT
AND PROPERTY AGREEMENTS ("Agreement') is made and entered into as of the. %5" day
of , 20N, by and among CITY OF HUNTINGTON BEACH, a public body, corporate
and politic (herein the "City'l; PCH BEACH RESORT, LLC, a California limited liability
company ("Devrloper'�; PCH RESORT HOLDING, LLC, a Delaware limited liability company
("Mezzanine Borrower') GMAC COMMERCIAL MORTGAGE BANK, a Utah industrial bank
("Senior Lender"); and GMAC COMMERCIAL MORTGAGE CORPORATION, a California
corporation ("Junior Lender").
PRELIMINARY RECITALS:
A. The City and Mayer Financial, L.P., as developer ("Mayer") have entered into an
Amended and Restated Development Agreement dated as of September 21, 1998, recorded in the
Recorder's Office of Orange County, California as Document No. 19980938602 (`Development
Agreement') pursuant to which the City and Mayer have entered certain agreements thereunder
with respect to the development of the Project (as defined in the Development Agreement) on the
Property (as defined in the Development Agreement) and as more particularly descn'bed in
Exhibit -A" attached hereto.
B. The Property consists of three defined tracts of real estate all as more particularly
described in the Development Agreement as the "Ocean Grand Resort Portioa , the `Third Hotel
Portion", and the "Residential Parcel".
C. Pursuant to an Assignment and Assumption and Consent to Assignment dated
April 3, 2001 between Mayer and the Developer, Mayer has assigned and the Developer has
assumed all of the rights and obligations of Mayer under the Development Agreement insofar as
it relates to but only as it relates to the Ocean Grand Resort Portion. Mayer remains as the
developer of the remainder of the Property. The Ocean Grand ResortPortion is more particularly
described in Exhibit'93 to this Agreement and is hereinafter referred to as the "Development
Property`
D. - Pursuant to Amended and Restated Disposition and Development Agreement by
and between Mayer and the Redevelopment Agency of the City of Huntington Beach
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("Agency') dated as of September 14, 1989 ("Original Agreement'), as amended by that certain
First implementation Agreement to Amended and Restated Disposition and Development
Agreement dated as of May 15, 2000 ("First Implementation Agreement') and as further
amended by Second implementation Agreement to Amended and Restated Disposition and
Development Agreement dated as of February 5, 2001 ("Second Implementation Agreement")
(the Original Agreement as amended by the First Implementation Agreement and Second
Implementation Agreement being herein referred to as the "DDA'), the Agency has ]eased the
Development Property to Developer pursuant to that certain unrecorded Ground Lease dated
April4, 2001 {"Ground Lease'). A Memorandum of the Ground Lease was filed and recorded on
April 18, 2001 as Document No. 20010232769 herewith in the Office of the County Recorder,
Orange County, Califcmia ("Memorandum').
E. Pursuant to the DDA and Ground Lease the Developer constructed a resort hotel
of approximately 519 keyed guest rooms, a conference center and other amenities on the
Development Property ("Resort Hotel Project').
. F. The Developer obtained a bridge loan from Senior Lender on or about May 29,
2003, in the original principal amount of Eighty -Five Million and No/100 Dollars
($85,000,000.00) (the "Bridge Loan') to refinance a construction loan made in connection with
the Development Property. In furtherance thereof, Developer and Senior Lender entered into
certain loan documents wherein Senior Lender disbursed the Bridge Loan, or portions therco& to
Developer under the conditions contained therein.
G. Developer has obtained from Senior Lender a commitment for a senior loan (the
"Senior Loan') in the maximum principal amount of Nincty Five Million and No/100 Dollars
(S95,000,000.00) and in connection therewith the Developer will execute and deliver to Senior
Lender its deed of trust encumbering and conveying the Developer's interest in the Resort Hotel
Project as security for the Senior Loan. In furtherance thereof, Developer and Senior Lender
have entered into or will enter into certain loan documents ("Senior Loan Documents") wherein
Senior Lender shall disburse the Senior Loan, or portions thereof, to Developer under the
conditions contained therein.
H. To evidence the Senior Loan, the Developer will be executing and delivering to
Senior Lender its Deed of Trust Note in the amount of the Senior Loan (herein the "Senior
Note').
I. As security for the repayment of the Senior Note, among other collateral
documents, the Developer has or will be executing and delivering to Fidelity National Title
Company, as trustee, for the benefit of Senior Lender its Leasehold Deed of Trust, Assignment
of Rents and Profits, Security Agreement, and Fixture Filing of even date herewith (herein the
"Deed of Trust') conveying the Development Property in trust to Fidelity National Title
Company, as trustee, for the benefit of the Senior Lender.
J. Junior Lender has entered into a commitment to make a mezzanine loan (the
"Mezzanine Loan") to Mezzanine Borrower, the sole managing member of Developer, in the
maximum principal amount of Twenty Million and No/100 Dollars (S20,000,000.00) and in
connection therewith the Mezzanine Borrower will execute and deliver to Junior Lender, among
I62MI9740.001]
3331909 810r1444 -2-
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other collateral documents, its pledge and security agreement (the "Pledge Agreement") creating
a security interest in Mezzanine Borrower's direct and/or indirect ownership interests in
Developer, which security interest is in favor of Junior Lender and is security for the Mezzanine
Loan, in furtherance thereof, Mezzanine Borrower and Junior Lender have entered into or will
enter into certain loan documents ("Mezzanine Loan Documents"), including, without limitation,
a loan agreement (the "Mezzanine Loan Agreement') wherein Junior Lender shall disburse the
Mezzanine Loan, or portions thereof, to Mezzanine Borrower under the conditions contained
therein, and an intercreditor agreement with Senior Lender (the "Intercreditor Agreement').
I{, To evidence the Mezzanine Loan, the Mezzanine Borrower will be executing and
delivering to Junior Lender a promissory note in the amount of the Mezzanine Loan (herein the
41Mczzanine Note").
L. The proceeds of the Senior Loan and the Mezzanine Loan will be used to
refinance the Bridge Loan and repay other existing loans and preferred equity affecting the
Development Property.
M. As further security for the Senior Loan and the Mezzanine Loan and as a
condition to its disbursement of the proceeds of the Senior Loan and the Mezzanine Loan, the
Senior Lender and the Junior Lender (collectively, the "Lenders') have required that the City
provide certain assurances to the Lenders.
NOW THEREFORE, the parties agree as follows:
1. A true and correct copy of the Development Agreement was recorded in the
Recorder's Office of Orange County, California as Document No. 19980838602 on December 7,
1998. '
2. The Development Agreement remains in full force and effect and has not been
modified, supplemented or amended in any respect, whether in writing or orally, and no uncured
default currently exists thereunder.
3, The City previously consented to the acquisition of the ground lease interest of
the Development Property by the Developer and acknowledges and agrees that for purposes of
the development of the Development Property the Developer shall be the 'Veveloper" of the
same as set forth in the Development Agreement and is entitled to all of the benefits of the
"Developer" under the Development Agreement insofar as it affects or relates to the
Development Property and the Developer is responsible for only those obligations imposed
under the Development Agreement insofar as they relate to development of the Development
property, In addition, the City hereby expressly approves and consents to (a) any subsequent
transfer, whether voluntary or involuntary, of membership interests in Mezzanine Borrower or
Borrower between Grand Resort, LLC ("GR") and Coast Beach, LLC ("CB"), two of the three
original members of the Mezzanine Borrower, so long as such transfer is pursuant to either CB
or GR exercising its rights under Section 4.2(b), 4.6, 7.1 or 9.6 of the Mezzanine Borrower's
Limited Liability Company Agreement or pursuant to any corresponding provisions in
Borrower's Limited Liability Company Agreement, together with (i) any subsequent change in
the share of capital or profits held by GR or CB in the Mezzanine Borrower or Borrower from
16IF014140-001 ]
$2319d.09 a 1WO44M -3-
time to time, so long as such transfer is pursuant io either CB or GR exercising its rights under
Section 4.2(b), 4.6, 7.1 or 9.6 of the Mezzanine Borrower's Limited Liability Company
Agreement or pursuant to any corresponding provisions in Borrower's Limited Liability
Company Agreement, (ii) any subsequent change in interests, capital or profits that results in CB
becoming the managing member of the Mezzanine Borrower or Borrower, so long as such
transfer is pursuant to either CB or GR exercising its rights under Section 4.2(b), 4.6, 7.1 or 9.6
of. the Mezzanine Borrower's Limited Liability Company Agreement or pursuant to any
corresponding provisions in Borrower's Limited Liability Company Agreement, and (iii) any
subsequent change in the ownership of shares in (x) SPE Resort Holding, Inc. ("SPE Holding'j,
the third member of the Mezzanine Borrower, or (y) SPE PCH Beach Resort, Inc. ("SPE Beach
Resort'), which results from any of the foregoing permitted transfers so long as SPE Holding's
or SPE Beach Resort's membership interest in the Developer does not increase as a result
thereof, (b) the replacement of Mezzanine Borrower as a member of Borrower in place of CB
and GR, (c) the addition of CB, GR and SPE Holding as members of the Mezzanine Borrower,
(d) any transfers that result in the transfer of membership interests to a third party so long as the
existing members, in the aggregate, retain a Controlling Interest in the Borrower or Mezzanine
Borrower (the terra "Controlling Interest" as used herein shall mean with respect to any entity,
other than an individual, (i) an ownership interest in Borrower or Mezzanine Borrower totaling
in excess * of fifty percent [501/o] of the voting and ownership interests of such entity, or (ii)
control of the management and day to day operations of such entity), and (e) a voluntary or
involuntary sale, exchange, conveyance or direct or indirect transfer of membership interests or
"units" in either CB or GR's limited liability company, or the creation or issuance of new
membership interests or "units" therein in one or a series of transactions, so long as the result is
that an aggregate of at least 51% of each such company's membership interests or "units" shall be
vested legally or beneficially in a party or parties who are now members of each of such
companies. No such transfers shall require any notice to the Agency or the taking of any act by
the Developer or its members as a condition to the effectiveness thereofi Notwithstanding
anything contained herein to the contrary and the execution of this Agreement by Lender, the
foregoing transfers of interests in Borrower and/or Mezzanine Borrower shall remain subject to
the terms and provisions of the Senior Loan Documents and the Mezzanine Loan Documents, as
applicable.
4. The City recognizes each of the Lenders as a "Mortgagee" (as defined in the
Development Agreement). As a recognized Mortgagee each of the Lenders is entitled to all of
the rights and benefits contained in Section 3.4 4on a ee Erolection of the Development
Agreement.
5. The City consents to the terms of the Mezzanine Loan Documents and the
execution, delivery and performance of all obligations set forth therein by Developer.
6. The City has approved the discretionary land uses required to effect the Resort
Hotel Project and has issued a Certificate of Occupancy for the Resort Hotel Project.
7. No default by Mayer or any other developer under the Development Agreement
with respect to the Residential Parcel, Third Hotel Portion or Hilton Parcel (as defined therein)
shall constitute a default by the Developer with respect to the Development Property and no
termination of the Development Agreement or exercise of remedies by the City by reason of a
,e2,e,974& ou
5213909 a10f1410+ -4-
default by Mayer or any other developer under the Development Agreement with respect to the
Residential Parcel, 'third Hotel Portion or Hilton Parcel shall constitute a default by the
Developer with respect to the Development Property nor entitle the City to terminate the
Development Agreement or exercise any of its remedies thereunder as they relate to the
Development Property.
S. . No termination of the Development Agreement by Mayer or any other developer
under the Development Agreement as to the Residential Parcel, Third Hotel Portion or Hilton
Parcel shall terminate the Development Agreement insofar as it relates to the Development
Property.
9. Subject to City's rights and obligations under the Development Agreement during
a default thereunder, so long as there is no default under the Development Agreement, City shall
not consent to a mutual termination, modification or amendment of the Development Agreement
insofar as it affects the Development Property without the prior written consent of the Lenders. .
10. The City acknowledges that the Lenders are not parties to the Development
Agreement and by executing this Agreement do not become parties to the Development
Agreement.
IL The collateral assignment of the interest of Developer under (i) that certain
License Agreement to Provide Landscaping and Other Improvements in the Public Right -of -Way
dates! February 20, 2U01, by and between City, Mayer and the Waterfront Hotel, LLC ('license
Agreement') to Senior Lender in connection with the Senior Loan and the assignment of
Developer's ground leasehold interest to the Senior Lender for collateral security purposes is a
permitted assignment under the terms of the License Agreement and (ii) that certain Agreement
Involving the Installation of Pedestrian Overcrossing dated February 20, 2001, by and among
City, Mayer and the Orange County Sanitation District ("Pedestrian Overcrossing Agreement")
to Senior Lender in connection with the Senior Loan and the assignment of Developer's ground
leasehold interest to the Senior Lender for collateral security purposes is a permitted assignment
under the terms of the Pedestrian Overcrossing Agreement. -
12. City acknowledges that Developer's obligations to install, construct and develop
certain improvements, including without limitation, the pedestrian overcrossing spanning the
Pacific Coast Highway, as such improvements relate to the Development Property and more
particularly described in the 0 the License Agreement (as defined in Section 10 above), (iii)
Cooperative Agreement (District 12-373), (iii) Cooperative Agreement (District 12-375), (iii)
Subdivision Agreement, and (iv) Pedestrian Overcrossing Agreement (as defined in Section I0
above) (collectively, the "property Aigreements") are satisfactorily completed and, to City's best
knowledge, no defaults exist under the Property Agreements.
13. City acknowledges and agrees that on May 29, 2003, a Release of Construction
Covenants was recorded as Document No. 2003M24371 in the Official Records of Orange
County, California, and that such document constitutes the issuance of a "Certificate of
Completion" for purposes of Section 41.2.2 of the Development Agreement, evidencing
satisfactory completion of all construction and development related to the Development Property
required tinder the Development Agreement.
1b2�Ot97�4C01J
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14. City acknowledges that the Development Agreement was terminated with respect
to the Development Property as of the recordation of the Release of Construction
Covenants/Certificate(s) of Completion. except as set' 'forth in Section 4.2.2.2 of the
Development Agreement.
15. City acknowledges that as to the Development Property. the certain Subdivision
Agreement by and between City and Mayer for Tract No. 15535 dated August 2, 1999 (the
"Subdivision Agreement") has been assigned by Mayer to Developer pursuant to that certain
Assignment and Assumption Agreement for Subdivision Agreement dated Decanber 16. 2001
(the "Subdivision Assignment") which Subdivision Assignment has been approved by the City
Council of City on December 16, 2001. The Residential Parcel is no longer owned by Mayer.
16. The City agrees to give to the Lenders any notices the City is required to give to
the Developer under the Development Agreement End shall notify the Lenders of any default by
the Developer under the Development Agreement and the Lenders shall have the same rights as
the Developer to cure such default as provided in the Development Agreement. Any notices
required hereunder shall be provided in the manner and form required under the Development
Agreement and shall be addressed as follows:
To the Senior Lender:
GMAC Commercial Mortgage Bank
6955 Union Park Center. Suit: 330
Midvale, UT 84047
Attn: Loan Notices (GMACCM Loan No. 01-1045911)
with a copy to:
Katten Muchin Zavis Rosenman
1025 Thomas Jefferson Strect, N.W.
East Lobby, Suite 700
Washington, D.C. 20007-5201
Attn: Christopher J. Hart, Esq.
To the Junior Lender.
GMAC Commercial Mortgage Corporation
8614 Westwood Center Drive, Suite 630
Vienna, Virginia 22182-2233
Attn: Morgan G. Earnest, IL
Senior Vice President (Gh1.ACCM Loan No. 01-1045912)
GMAC Commercial Mortgage Corporation
200 Witmer Road
Horsham, Pennsylvania 190U
Attn: Mezzanine Loan Notices (GMACCM Loan No. 01-1045912)
162,0191404613
$23296.09 pIO114104
with a copy to:
To the City:
Katten Muchin Zavis Rosenman
1025 Thomas Jefferson Street, N.W.
East Lobby, Suite 700
Washington, D.C. 20007-5201
Attu: Christopher J. Hart, Esq.
City of Huntington Beach
City Hall
2000 Main Street
Huntington Beach, California 92648
Attu: David Biggs, Director of Economic Development
To the Developer.
PCH Beach Resort, LLC
do The Robert Mayer Corporation
Suite 1050
660 Newport Center Drive
Newport Beach, California 92660
Attn: Robert L. Mayer and Stephen Bone
with a copy to:
Coast Beach, LLC
c/o Hyatt Development Corporation
200 West Madison Avenue
Chicago, Illinois 6060
Attn: Dale Moulton
17. Notwithstanding The place of execution of this instrument, the parties to this
instrument have contracted for California law to govern this instrument and it is controllingly
agreed that this instrument is made pursuant to and shall be construed and governed by the laws
of the State of California without regard to the principles of conflicts of law.
18. This Agreement and each and every covenant, agreement and other provision
hereof shall be binding upon and shall inure to the benefit of the Lenders, the Developer, the City
and their respective successors and assigns.
19. The unenforceability or invalidity of any provisions hereof strait 'not render any
other provision or provisions herein contained unenforceable or invalid.
20. - This Agreement may be executed in any number of counterparts which together
shall constitute one and the same instrument.
la'619740-MI)
S"jq&V987D44 &
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IN FURTHERANCE, this Agreement is executed as of the date first above -written.
t
PCH BEACH RESORT, LLC, a California
limited liability company
By: PCH RESORT HOLDING, LLC,
a Delaware Iimited liability company,
Its: Managing Member
By: GRAND RESORT, LLC, a California
limited liability company,
Its: Managing Member
By: RLM MANAGEMENT, INC., a California
corporation,
Its: Manager
By'. AR11f A 1174,11,_
Robert-L. Ma —
Its: President
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PCH RESORT HOLDING, LLC,
a Delaware limited liability company,
By: GRAND RESORT, LLC, a California limited liability
company,
Its: Managing Member
By: RLM MANAGEMENT, INC., a California
corporation,
Its: Manager
By:
Robert L. Mayer, j
Its: President
112
CITY OF HUN MGTON BEACH, a public body,
corporate and politic
By:
Its: City Administrator
Approved as to Form:
City..Attorne
Approved as to Fogn
Kan Billmer &
City► 1pecial Cot
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personally appeared
before me, ;-1 r1Q (i t?
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personally known to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that
he/shc/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s) or the entity upon•bchalf of which the person(s)
acted, executed the instrument.
Witness my hand and official seal.
[SEAL]
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personally appeared
Notary Public
COMMONWEALTH OK PENNSYLVAMA
NOTARIAL SEAL
DINA MARIE LAURO. Notary PubM
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personally known to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in hisfherltheir authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s)
acted, executed the instrument.
Witness my hand and official seal.
a- (: rh "A'V
Notary P lie
RsYa Robinson
JSEAQ NOTRAY PUBLIC
CommonweoM of Virginsc
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GMAC COMMERCIAL MORTGAGE BANK,
a Utah industrial bank
By:
Its: SENIOR MCE PRESIDENT
GMAC COMMERCIAL MORTGAGE CORPORATION,
a California corporation
By:
Its: Lewis L. Delafield
A001100 bignalot?
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STATE OF CALIFORNIA }
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COUNTY OF Om-ri.3e )
On t' before me, .-- j-r—e±L. M , 5 M i
personally appeared r F r r
personally ]mown to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose names) is/are subscribed to the within instrument and acknowledged to me that
he/shehhey executed the same in his/her/their authorized capacity(ics), and that by his/her/their
signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s)
acted, executed the instrument.
Witness my hand and official scat.
lot7m M. iiH
[SEAL]%,My
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STATE OF CALIFORNIA }
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COUNTY OF Lr��Q- _)
+r ber la aft y before me, dSr
On
personally appeared f, t
Notary Public
personally known to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that
helsbelthey executed the same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s) or the entity upon behalf of which the persons)
acted, executed the instrument.
Witness my hand and official seal.
i LORMA M. VAMN-tary Public
ComffA41on 1143D91-i
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Otange County e
[ SEAL] My Comm. Expires JJ 15. W,;
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COUNTY OF ORANGE )
On October 14, 2004, before me, K. Copeland, personally appeared Penelope Culbreth
Graft personally kno Am to me _ to be the
person(s) whose name(s) ism subscribed to the within instrument and acknowledged to me that
W. sheer executed the same in hWherAheif authorized capacity, and that by hisAhcrAheif
signaturc(s) on the instrument the persons or the entity upon behalf of which the person
acted, executed the instrument,
Witness my hand and official seal.
F
K. COPELAND
r" comm.0140 o4
E NOTARY PUBLIC • CAUFORMA
{a ORANGE UNITY �
�.AlYCOMM, EXPIRES APR,L8,2007 "� Notary Public
(SEAL)
EXHIBIT "A"
DESCRIPTION OF PROPERTY SUBJECT TO DEVELOPMENT AGREEMENT
ALL THAT CERTAIN LAND IN THE CITY OF HUNTINGTON BEACH, COUNTY OF
ORANGE, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS:
THAT PORTION OF SECTION 14, TOWNSHIP 6 SOUTH, RANGE I 1 WEST, SAN
BERNARDINO BASE AND MERIDIAN, IN THE RANCHO LOS BOLSAS, AS PER MAP
FILED IN BOOK 51, PAGE 14 OF MISCELLANEOUS MAPS IN THE OFFICE OF THE
COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: -
BEGINNING AT THE INTERSECTION OF A LINE THAT IS PARALLEL WITH AND $0.00
FEET WEST OF THE EAST LINE OF SAID SECTION l 4; WITH THE NORTH LINE OF
THE SOUTH HALF OF THE NORTHEAST QUARTER OF SAID SECTION, THENCE
SOUTH 0004472" EAST 1820.36 FEET ALONG SAID PARALLEL LINE TO A POINT IN
THE NORTH LINE OF THE LAND DESCRIBED IN BOOK 2351, PAGE 5 OF OFFICIAL
RECORDS OF SAID COUNTY; THENCE SOUTH 74°34'12" WEST 4S.01 FEET ALONG
SAID NORTH LINE TO A POINT IN THE NORTHEAST LINE OF THE LAND
DESCRIBED AS PARCEL 2 IN BOOK 826, PAGE 379, OF SAID OFFICIAL RECORDS;
THENCE NORTH 53"05'49" WEST 172.33 FEET ALONG SAID NORTHEAST LINE TO A
POINT IN THE WEST LINE OF THE LAND DESCRIBED IN BOOK 261, PAGE 41 OF
DEEDS, RECORDS OF SAID COUNTY; THENCE NORTH 00°44'22" WEST 12.63 FEET
ALONG SAID WEST LINE TO A POINT IN THE NORTHEASTERLY RIGHT OF WAY
LINE OF PACIFIC COAST HIGHWAY AS DESCRIBED IN BOOK 455, PAGE 400 OF
SAID OFFICIAL RECORDS; THENCE NORTH 53°05'49" WEST 1966.76 FEET ALONG
-SAID NORTHEAST LINE TO THE MOST SOUTHERLY CORNER OF LOT 1, TRACT NO.
I3045, RECORDED IN BOOK 628, PAGES 46 AND 47 OF MISCELLANEOUS MAPS,
RECORDS OF SAM COUNTY; THENCE NORTH 36054'20" EAST 360.46 FEET ALONG
THE SOUTHEASTERLY OF SAID LOT I TO THE MOST EASTERLY CORNER OF SAID
LOT 1; THENCE SOUTH 48*4321" EAST 25.00 FEET; THENCE NORTH 41016'39" EAST
97.00 FEET; THENCE NORTH 4804371" WEST 38.85 FEET TO THE BEGINNING OF A
CURVE CONCAVE SOUTHWESTERLY, HAVING A RADIUS OF 2452.00 FEET; THENCE
NORTHWESTERLY 252.68 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE
OF 0505416" TO A POINT ON THE NORTH LINE OF THE SOUTH HALF OF THE
NORTHEAST QUARTER OF SAID SECTION 14, A LINE RADIAL TO SAID POINT
BEARS NORTH 35°2275" EAST; THENCE NORTH 89"4258" EAST 1658.70 FEET ALONG
SAID NORTH LINE TO THE POINT OF BEGINNING.
EXHIBIT "A"
TO AGREEMENT WITH LENDER REGARDING
5231%.o99; WllAA DEVELOPMENT AGREEMENT
EXHIBIT "B"
DESCRIPTION OF DEVELOPMENT PROPERTY
All that certain land sih:ated in the State of California, County of Orange, City of Huntington
Beach, and is described as follows:
arcel
Lot 1 of Tract No. 15535, as shown on a map filed in Book 790, pages 44 to 50 inclusive of
Miscellaneous Maps, Records of Orange County, California
Parcel B•
A non-exclusive revocable license to utilize that certain area defined as "Grand Coast Resort
Improvement Area" in that certain "License Agreement to Provide Landscaping and Other
improvements in the Public Right -Of -Way" ("Agreement") recorded April 18, 2001 as
instrument No. 20010232765 of Official Records of Orange County, California, and delineated
on Exhibit "F" attached thereto, for the installation, maintenance, repair and replacement of
landscaping and other improvements, as said license is set forth in paragraph 2 of the Agreement.
Mel
A non-exclusive revocable license to utilize that certain area defined as "Overcrossing
Improvement Area' in that certain "License Agreement to Provide Landscaping and Other
Improvements in the Public Right -Of -Way' ("Agreement") recorded April 18, 2001 as
Instrument No. 20010232765 of Official Records of Orange County, California, and delineated
on Exhibit "G" attached thereto, for the installations, maintenance, repair and replacement of
overcrossing and other improvements, as said license is set forth in paragraph 2 of the
Agreement.
EXHIBIT "B"
TO AGREEMENT WITH LENDER REGARDING
167,1019J46A013
52389&09&M144 DEVELOPMENT AGREEMENT
� 1� — C�• ��+`l , �caN -ley -
Council/Agency Meeting Held: 02---- OS— v 1 ^
Deferred/Continued to -
Approved 0 Conditionally Approved„ , ❑ Denied
Dip- Cty-tIE6kb�Signatu
Council Meeting Date: February 5, 2001 1 Department ID Number: ED 01-03 1
CITY OF HUNTINGTON BEACH r
REQUEST FOR REDEVELOPMENT AGENCY ACTION = ,
i^
SUBMITTED TO: HONORABLE CHAIRMAN AND REDEVELOPMENT AGENCY
MEMBERS
SUBMITTED BY: RAY SILVER, Executive Director OW
PREPARED BY: DAVID C. BIGGS, Director of Economic Development
SUBJECT: Accept and Approve Second Implementation Agreement to
Amended and Restated Disposition and Development Agreement
with Mayer Financial, L.P.
Statement of issue, Funding Source, Recommended Action, Alternative Action(s), Analysis, Environmental Status, Attachment( s)
Statement of Issue: The Redevelopment Agency is party to a Disposition and
Development Agreement (DDA) with Mayer Financial, L.P. (the Developer). This agreement
was subsequently amended by a First Implementation Agreement. These two agreements
together constitute the "Existing Agreement." This agreement provides for the phased
disposition of hotel site, the residential property and related public improvements. The
Second Implementation Agreement is submitted to the Agency in an effort to acknowledge
the Settlement Agreement with the Coastal Commission and its related consequences of
potentially reducing the number of residential units, as well as acknowledging the License
Agreement with the City for the pedestrian overcrossing, and restricting the eligible costs for
which the Agency can reimburse the Developer.
Funding Source: Not Applicable.
Recommended Action: Motion to:
1. Accept and Approve the Second Implementation Agreement to Amended and Restated
Disposition and Development Agreement between the Redevelopment Agency of the
City of Huntington Beach and Mayer Financial, L.P.
2. Authorize Agency Chairman and Agency Clerk to Execute the Second Implementation
Agreement.
F-3
• REQUEST FOR ACTION •
MEETING DATE: February 5, 2001
Alternative Action(s):
DEPARTMENT ID NUMBER: ED 01-03
1. Direct staff to pursue modifications to the proposed Second Implementation Agreement;
3. Do not approve the proposed Second Implementation Agreement.
Analysis: The Redevelopment Agency entered into a Disposition and Development
Agreement (DDA) with Mayer Financial, L.P on September 14, 1998, for the development of
the Ocean Grand Resort hotel complex and the development of between 150 and 230
residential units to be built behind the Ocean Grand Resort. The First Implementation
Agreement was subsequently amended on May 15, 2000. This agreement contained several
provisions: 1) it clarified the termination dates of the lease of the third hotel site, 2) it clarified
the sharing of costs associated with demolition and clearance of the mobile homes, 3) it
clarified the use of the Section 108 Loan and the Community Facilities District bonds as a
repayment source for the developer advance, 4) clarified the no -cross default provisions of
the residential and hotel parcels, 5) it provided the phased conveyance of the residential and
hotel parcels, and 6) it called for the completion of wetlands mitigation at the Shipley Nature
Center by the Developer.
The Second Implementation Agreement attempts to clarify, acknowledge and restrict certain
actions and activities related to the development of the hotel, the residential property and the
construction of public improvements. This is necessary in light of the "Settlement
Agreement" reached between the Robert Mayer Corporation, and Robert L. Mayer with the
Coastal Commission on or about November 29, 2000. Specifically, the Second
Implementation Agreement accomplishes the following:
Acknowledges the Settlement Agreement with the Coastal Commission to protect the
Degraded Wetland Area on the property that was going to be developed with residential
units.
2. The minimum number of residential units is reduced to be 120 from 150 homes.
3. Deletes the requirements for the Developer to complete the wetland mitigation at the
Shippley Nature Center.
4. Modifies the schedule pertaining to the commencement of the construction of the
residential units.
5. Acknowledges the License Agreement entered into by the City, the Waterfront LLC and
the Developer to construct the pedestrian overcrossing, provide landscaping and
construct other improvements in the Public Right -of Way.
6. Restricts and clarifies the eligible costs for which the Developer is entitled to make
payments or reimbursements from the Agency.
MayerindlmpIRCA -2- 01/26/01 8:51 AM
• REQUEST FOR ACTION •
MEETING DATE: February 5, 2001
DEPARTMENT ID NUMBER: ED 01-03
7. Requires the Developer to convey the Degraded Wetland Area portion of the residential
site back to the Redevelopment Agency at the earliest opportunity.
It is anticipated that the Redevelopment Agency will be conveying Parcel A, the hotellresort
property, and Parcel B, the residential parcel, to the Developer not later than February 28,
2001. The Developer will begin construction of the Grand Coast Resort immediately after
site conveyance. Completion of the Grand Coast Resort is anticipated in the third quarter of
2002.
Environmental Status: The Waterfront Expansion has been evaluated in Supplemental
EIR 82-2 and an Addendum as well as well as a NEPA document.
Attachment{s]:
RCA Author_ Gus Duran Ext. 1529
Mayer2ndlmplRCA -3- 01126/01 8:51 AM
(17) • February 5, 2001 Council/A911y Agenda - Page 17
F-3. (Redevelopment Agency) Approve the Second Implementation Agreement to
Amended and Restated Disposition and Development Agreement (DDA) with Mayer
Financial, L.P. (Waterfront Site Expansion — Hilton Grand Coast Resort) in
Connection with Settlement Agreement with the Coastal Commission ( _ )
Communication received from the Economic Development Department submitting that
the Redevelopment Agency is party to a Disposition and Development Agreement (DDA)
with Mayer Financial, L_P. (the Developer). This agreement was subsequently amended
by a First Implementation Agreement. These two agreements together constitute the
"Existing Agreement" and provide for the phased disposition of hotel site, the residential
property and related public improvements_ The Second Implementation Agreement is
submitted to the Agency to acknowledge the Settlement Agreement with the Coastal
Commission and its related consequences of potentially reducing the number of
residential units, as well as acknowledging the License Agreement with the City for the
pedestrian overcrossing, and restricting the eligible costs for which the Agency can
reimburse the Developer. (See Agenda Item F-2 above re: the pedestrian
overcrossing_)
Redevelopment Agency Recommended Action: Motion to:
1. Accept and approve the Second Implementation Agreement to Amended and
Restated Disposition and Development Agreement between the Redevelopment
Agency of the City of Huntington Beach and Mayer Financial, L.P.
and
2. Authorize Agency Chairman and Agency Clerk to Execute the Second
Implementation Agreement_
N_ u [Economic Development Director presented PowerPoint slide
j� report. Redevelopment Agency Special Counsel Murray Kane
re orted.]
M To WNYRD MFty FMm C91rVCMghUR WOM1 (D6kb 62- 62.-01'
(a) Motion failed to select Huntington Beach Wetlands
Conservancy as interim maintainer and manager [2-4-1
(Green, Julien Houchen, Dettloff, Bauer No; Garofalo out of
room)]
(b) Refer selection of non-profit group to the Bolsa Chica
Committee and that committee interview and return to Council
with their recommendation at the February 20, 2001 Council
meeting [Approved 6-0-1 (Garofalo out of room)]
(c) Approved recommended action (1) & (2) as amended by (b)
[7-0]
• (L 0�
CITY OF HUNTINGTON BEACHF.JB
H
HUNTINGTON BEACH CITY COUNCIL MEMO
G _ -
G` '
To:
Council Members and City Administrator G- -
From:
Connie Boardman
Date:
February 2, 2001
Subject:
Agenda item F-3
As part of agenda item F-3 the council will be voting to approve the second implementation
Agreement to Amended and Restated Disposition and Development Agreement between the
Redevelopment Agency and Mayer Financial, L.P. As part of the agreement, the city is to convey
parcel "B" which includes the Little Shell wetlands. Also, as part of this agreement, the Mayer
Corporation will deed this property back to the city as soon as practicable after the conveyance.
The Huntington Beach Wetlands Conservancy has expressed an interest in maintaining and
managing the wetland during the interim period when the city does not own the property. At the
council meeting I will be proposing we add the following to the recommended staff action. -
Accept and approve the Second Implementation Agreement to Amended and Restated
Disposition and Development Agreement between the Redevelopment Agency of the City of
Huntington Beach and Mayer Financial L-P. with the following stipulation.
The council directs staff to facilitate a memorandum of understanding between the Huntington
Beach Wetlands Conservancy, Mayer Financial, L.P. and the City of Huntington Beach for interim
maintenance and management of the Little Shell Wetlands while the wetland area is not owned
by the City.
LAFE
car✓Yvi�,NICA�vN �-3
Second Implementation Agreement
ATTACHMENT #1
•
0
SECOND IMPLEMENTATION AGREEMENT
TO AMENDED AND RESTATED
DISPOSITION AND DEVELOPMENT AGREEMENT
This SECOND IMPLEMENTATION AGREEMENT TO AMENDED AND
RESTATED DISPOSITION AND DEVELOPMENT AGREEMENT (this "Second
Implementation Agreement"), dated as of February _-, , 2001, is entered into by and between the
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH ("Agency"), a
public body, corporate and politic, and MAYER FINANCIAL, L.P., a California limited
partnership ("Developer") (collectively, the "Parties").
RECITALS
A. Agency and Developer have entered into that certain Amended and Restated
Disposition and Development Agreement dated as of September 14, 1998 (the "Original
Agreement"), as amended by that certain First Implementation Agreement to Amended and
Restated Disposition and Development Agreement dated as of May 15, 2000 (the "First
Implementation Agreement") (the Original Agreement and the First Implementation Agreement
may hereinafter be referred to together as the "Existing Agreement"). The Existing Agreement
provides for the phased disposition of the "Site" described therein and the development and
operation by Developer on the Site of certain hotel, residential, and related improvements. All
defined terms set forth in this Second Amendment shall have the same meanings as are ascribed
to said terms in the Existing Agreement except as may be expressly set forth herein.
B. In connection with various disputes regarding an approximately 0.696-acre
"degraded wetland" located generally 1,000 feet inland of the northwest corner of Pacific Coast
Highway and Beach Boulevard within Parcel B of the Site (the "Degraded Wetland Area"), on or
about November 29, 2000, the California Coastal Commission ("Commission"), the City of
Huntington Beach ("City"), Agency, Developer, the Robert Mayer Corporation, and Robert L.
Mayer entered into a settlement agreement ("Settlement Agreement"), whereby the parties
thereto agreed that, among other things. Agency, as owner of Parcel B, would execute an Open
Space/Wetland Preservation and Restoration Deed Restriction (the "Deed Restriction") which
would limit, in perpetuity, the uses of the Degraded Wetland Area to natural open space for
wetland preservation and restoration uses. On or about November 29, 2000, Agency executed
the Deed Restriction and the Deed Restriction was recorded in the Official Records of Orange
County, California on December 19, 2000, as Instrument No. 2000689468.
C. The Existing Agreement provides for Developer to develop a minimum of 150
residential dwelling units on Parcel B of the Site. As a result of the execution of the Settlement
Agreement and the recordation of the Deed Restriction, Agency and Developer desire to reduce
the minimum number of residential dwelling units to be developed by Developer on Parcel B to
120 units.
D. The Existing Agreement requires Developer to complete the Shipley Nature Center
wetlands mitigation in accordance with plans first approved in writing by City, unless City
removes said obligation through the discretionary entitlement process for the Parcel B
improvements. Agency and Developer originally contemplated that Developer would (1) develop
Parcel B in its entirety, including the Degraded Wetland Area, as a residential project and (ii) in
lieu of preserving and or restoring the Degraded Wetland Area, Developer would complete the
Shipley Nature Center wetlands mitigation. Given that the Deed Restriction limits the use of the
Degraded Wetland Area to natural open space for wetland preservation and restoration uses,
Agency and Developer's original development and mitigation plans relating to the Degraded
Wetland Area are obsolete. Accordingly, Agency and Developer desire to amend the Existing
Agreement to (i) delete the requirement that Developer complete the Shipley Nature Center
wetlands mitigation, (ii) provide for the preservation of the Degraded Wetland Area in
accordance with the Deed Restriction, and (iii) provide for the conveyance of the Degraded
Wetland Area by Developer to Agency or Agency -approved designee as soon as practicable after
the conveyance of Parcel B by Agency to Developer, subject to the terms and conditions set forth
herein.
E. The Existing Agreement requires Developer to develop the Site in accordance with
the Schedule of Performance set forth therein. In particular, pursuant to Section l l of the First
Implementation Agreement, Developer is required to commence construction of the first phase
of the residential improvements to be located within Parcel B, comprised of a minimum of forty
(40) dwelling units, no later than March 1, 2001. Agency and Developer desire to modify the
date set forth in the Existing Agreement and Schedule of Performance for the commencement of
construction of the residential improvements on Parcel B, to require that Developer commence
rough grading and the first phase of the site work for Parcel B no later than 20 months after
Agency conveyance of Parcel B to the Developer.
F. On or about February 5 , 2001, City, The Waterfront, LLC, and Developer entered
into that certain License Agreement to Provide Landscaping and Other Improvements in the
Public Right -of -Way (the "License Agreement"), whereby, among other things, Developer and
The Waterfront, LLC, have agreed to be responsible for the construction, maintenance, repair,
reconstruction, and/or replacement of certain landscaping and other public improvements in the
public rights -of -way adjacent to Parcels A, C, and the Waterfront Hilton Parcel and, as to Parcel
A, a pedestrian overerossing of Pacific Coast Highway and related appurtenances, as more
particularly described therein. Agency and Developer desire to amend the Existing Agreement
to provide that (i) the failure by the ground lessee of Parcel A to timely perform any of its
material obligations set forth in the License Agreement shall constitute a Default under the
Parcel A Lease (Attachment No. 5 and Exhibit 5-A to the Existing Agreement, as modified by
this Second Implementation Agreement), and (ii) upon the conveyance of the long-term lease of
Parcel C pursuant to Article 200 of the Existing Agreement, the failure by the ground lessee of
Parcel C to timely perform any of its material obligations set forth in the License Agreement
similarly shall constitute a Default under the Parcel C Lease (Attachment No. 5 and Exhibit 5-C
to the Existing Agreement, as modified by this Second Implementation Agreement).
G. The Existing Agreement provides for Agency to pay or reimburse Developer for
certain Eligible Costs incurred by Developer with respect to its acquisition and development of
the Site. Agency and Developer desire to amend the Existing Agreement to restrict the
categories of Eligible Costs for which Developer is entitled to payment or reimbursement from
Agency in order to clarify that no portion of such Eligible Costs will be attributable to any
"construction, alteration, demolition, or repair work" (as said phrase is defined in California
Labor Code § 1720(a)) other than certain public facilities and improvements which are to be
-2-
constructed and installed by Developer within dedicated public rights -of -way. This Second
Implementation Agreement is not intended and shall not be interpreted to either increase the
amount of Eligible Costs to be paid or reimbursed by Agency to Developer or to increase the
scope of any Eligible Costs.
COVENANTS
Based on the foregoing Recitals, which are incorporated into this Second Implementation
Agreement by this reference, and for good and valuable consideration, the receipt of which is
hereby acknowledged by the Parties, Agency and Developer agree that the Existing Agreement
shall be further amended as follows:
1. The phrase on line 8 of Section 101(a) of the Original Agreement which reads "one
hundred and fifty (150) residences' is hereby amended to read "one hundred twenty (120)
residences."
The phrase on line 2 of the second paragraph of Paragraph I of the Scope of Development
(Attachment No. 4) of the Existing Agreement, entitled "Parcel B," which reads "one hundred
and fifty (150) residences' is hereby amended to read "one hundred and twenty (120)
residences." In addition, the last sentence of the same paragraph, which reads: "Each phase of
the Parcel B improvements shall consist of a minimum of forty (40) dwelling units" is hereby
amended to read: "Each phase of the Parcel B improvements except the final phase shall consist
of a minimum of forty (40) dwelling units."
Finally, in paragraphs ] (a) and (b) of the Form of Parcel B Grant Deed (Attachment No.
b) of the Existing Agreement, the phrase "one hundred and fifty (150) residences shall be
amended to read "one hundred twenty (120) residences."
Any other references to the number and type of residential dwelling units in the Existing
Agreement shall be deemed to have been amended consistent with the preceding three
paragraphs.
2. All provisions of the Existing Agreement requiring Developer to complete the
Shipley Nature Center wetlands mitigation, including without limitation Section II(C) set forth in
the Scope of Development attached to the Original Agreement as Attachment No. 4, as amended
by Paragraph 19 of the First Implementation Agreement, and Section (a)(1)(D) of the Schedule
of Feasibility Gap Payments attached to the Original Agreement as Attachment No. 8, are hereby
deleted in their entirety. Developer shall have no responsibility whatsoever for completing the
Shipley Nature Center wetlands mitigation.
3. A new Section 401(9) is hereby added to the Existing Agreement to read as follows:
"Refrain from developing, using, or maintaining the Degraded Wetland Area
referred to in Recital B of the Second Implementation Agreement in any
manner which would violate the provisions of the Deed Restriction. In
particular, use of the Degraded Wetland Area shall be limited to natural open
space for wetland preservation and restoration uses. No development as
-3-
defined in Public Resources Code section 30106, including but not limited to
the removal of trees and other major or native vegetation, grading, paving,
installation of structures such as signs, buildings, etc. shall occur or be
allowcd on the Degraded Wetland Area with the exception of the following
and subject to applicable governmental regulatory requirements: (a) the
removal of hazardous substances or conditions or diseased plants or trees; (b)
environmental educational uses pursuant to a coastal development permit. if
required; and (c) wetland restoration uses pursuant to a coastal development
permit, if required."
4. As soon as reasonably practicable after Agency's conveyance of Parcel B to
Developer pursuant to Article 200 of the Existing Agreement, Developer shall quitclaim the
Degraded Wetland Area back to Agency or any Agency -approved designee. Said conveyance
shall br accomplished in accordance with the following terms and conditions:
(a) Agency shall not be required to pay any purchase price or other casks or non -
cash consideration for said reconveyance. Except as expressly provided hereinbelow, each Party
shall bear its own costs and expenses with regard to the reconveyance and, to the extent that
there are any escrow fees or closing costs, each Party shall pay one-half (lit) of such casts.
Develop,Lr shall be responsible for paying all costs required to assure that title is reconveyed to
Agency in the same condition that existed when Parcel B was first conveyed by Agency to
Developer, excepting only (i) the lien of any real estate taxes and assessments allocable to the
Degraded Wetland Area (which shall be paid by Developer, subject to Developer's right to apply
to the County Assessor for a refund for taxes and assessments attributable to the period after the
conveyance to the Agency), (ii) any title exceptions or defects created or caused by Agency or
City, and (iii) any other title exceptions or defects that may be approved by Agency (or its
designee) in the transferee's sole and absolute discretion. Subject to the foregoing, any costs
incurred to obtain a title policy with respect to the Degraded Wetland Area shall be borne by
Agency.
(b) Prior to quitclaiming the Degraded Weiland Area to Agency (or Agency -
approved designee), Developer shall seek from the California Coastal Commission a
determination of whether such conveyance would constitute a "development" requiring the
issuance of a coastal development permit pursuant to the California Coastal Act and
implementing regulations. In the event a nonappealable determination is made by the California
Coastal Commission that such conveyance does not constitute a development requiring the
issuance of a coastal development permit, Developer shall promptly quitclaim the Degraded
Wetland Area to Agency pursuant to the terms and conditions of this Second Implementation
Agreement. In the absence of such nonappealable determination or in the event the California
Coastal Commission affirmatively determines that the conveyance requires the issuance of a
coastal development permit, Developer shall at its sole cost and expense proceed to request a
coastal development permit for the division of Parcel B into a Degraded Wetland Area parcel
and a remainder parcel or parcels for residential development as contemplated herein and for the
development of such remainder portion of Parcel B. Developer shall act in good faith and with
reasonable diligence to obtain said determination and/or permit as soon as possible after the
initial conveyance of Parcel B by Agency to Developer. In the event Developer has not obtained
such coastal development permit within the time period required in Section 7 herein for
commencement of construction for Parcel B, then Developer shall at its sole cost and expense
diligently proceed to process an application for a coastal development permit for the purpose of
the division of Parcel B into a Degraded Wetland Area parcel and a remainder parcel or parcels,
and the conveyance of the Degraded Wetland Area parcel to the Agency or its designee. If not
earlier conveyed pursuant to the foregoing provisions, Developer shall convey the Degraded
Wetland Area to Agency within ten (10) business days after a nonappealable determination is
made by the California Coastal Commission that the conveyance to Agency does not constitute a
development requiring the issuance of a coastal development permit, or the issuance of a final,
non -appealable coastal development permit authorizing the division of Parcel B into a Degraded
Wetland Area parcel and a remainder parcel or parcels, whichever occurs first. During any
period of time that Developer is pursuing a determination letter from the California Coastal
Commission or an issuance of a coastal development permit authorizing the division of Parcel B
and the conveyance of the Degraded Wetland Area, Developer shall keep Agency informed of
Developer's progress in obtaining said permit upon Agency's written or verbal request for
information. Agency shall reasonably cooperate with Developer in seeking to obtain any such
required coastal development permit, and shall accept conveyance of the Degraded Wetland
Area as contemplated hereinabove.
(c) During the period that Developer holds fee title to the Degraded Wetland
Area, Developer shall be responsible at its sole cost and expense for maintenance of the
Degraded Wetland Area and for complying with the use restrictions in the Deed Restriction.
Upon the conveyance of the Degraded Wetland Area by Developer to Agency, Developer shall
have no further rights or obligations with respect to the Degraded Wetland Area, except for any
damage caused to the Degraded Wetland Area which occurred directly or indirectly as a result of
or in connection with the acts of or on behalf of the Developer during the period Developer holds
fee title to the Degraded Wetland Area. Subject to Developer's obligation to comply with
applicable provisions of the Deed Restriction, the Degraded Wetland Area shall be conveyed to
Agency in the same physical condition as it was originally conveyed from Agency to Developer.
In no event shall Developer have any obligation to restore the Degraded Wetland Area.
(d) In the event any deed of trust or other encumbrance is recorded against Parcel
B in accordance with the Existing Agreement ("Parcel B Trust Deed"), such Parcel B Trust Deed
shall be subordinate to the Deed Restriction and Developer shall cause the holder of the Parcel B
Trust Deed to permit the reconveyance of the Degraded Wetland Area from the lien of such
Parcel B Trust Deed at such time as Developer is to convey the Degraded Wetland Area to
Agency as provided hereinabove, and the loan documents executed in connection with the Parcel
B Trust Deed shall provide for such partial reconveyance. Prior to executing such loan
documents, Developer shall submit the loan documents to the Agency Executive Director or
designee, who shall review and approve such loan documents for compliance with this Section
4(d). Failure by Developer to cause the holder of the Parcel B Trust Deed to reconvey the
Degraded Wetland Area from the lien of the Parcel B Trust Deed at time the Degraded Wetland
Area is conveyed to the Agency shall constitute an Event of Default under the Original
Agreement.
(e) At Agency's option, the conveyance of the Degraded Wetland Area by
Developer to Agency may be handled by an escrow company of Agency's choosing. In the event
that Agency elects to use the services of an escrow company, the Parties agree to execute such
further and supplemental escrow instructions that may be required by the escrow agent, provided
that such instructions shall be consistent with the applicable provisions of this Second
-5-
Implementation Agreement and in the event of any inconsistency between said instructions and
this Second Implementation Agreement, the provisions of this Second Implementation
Agreement shall control.
5. At such time that Developer conveys the Degraded Wetland Area to Agency or
Agency's approved designee pursuant to this Second Implementation Agreement, all references
in the Existing Agreement (as amended) to the "Site" and "Parcel B" shall be deemed to exclude
the Degraded Wetland Area.
6. Paragraphs 2, 3, 5, 6, 7, 8, 9, 10, 12, 13, 15, 16, 18, 20, and 21 and the first
paragraph of Paragraph 1 1 of the First Implementation Agreement are hereby deleted in their
entirety and the provisions of the Original Agreement that were amended or deleted by those
provisions are hereby reinstated. In addition, the phrase "to provide for the conveyance of Parcel
B to occur in two (2) phases and" in the second sentence of Recital G of the First Implementation
Agreement is hereby deleted. Finally, the references to Parcels B-1 and B-2 in clause (c) of the
first sentence of Section 507 of the Existing Agreement (as modified by Paragraph 14 of the First
Implementation Agreement) are hereby modified to refer to Parcel B and any other references in
the Existing Agreement to Parcels B-1 and B-2 that are not deleted by this Second
Implementation Agreement shall be deemed to refer to Parcel B as described in the Original
Agreement.
7. Developer's obligation to commence the first phase of construction of the residential
improvements on Parcel B by March 1, 2001 pursuant Section 308 of the Original Agreement, as
amended by Section 11 of the First Implementation Agreement, and the Schedule of
Performance, attached to the Original Agreement as Attachment No. 3, is hereby modified to
require that Developer commence rough grading and the first phase of the site work for Parcel B
no later than 20 months after Agency conveyance of Parcel B to the Developer.
S. Section 307(a)(4) and Section 307(c) of the Existing Agreement arc hereby deleted.
Sections 307(d) and (e) are hereby relettered Section 307(c) and (d), respectively.
9. Section 1201(a) of the Form of Ground Lease (Attachment No. 5 of the Existing
Agreement) is hereby amended to read in its entirety as follows:
"Subject to the extensions of time set forth in Section 1314 of this Lease,
failure or delay by either party to perform any term or provision of this Lease
and failure or delay by Lessee to perform any of its obligations that are set
forth in that certain "License Agreement to Provide Landscaping and Other
Improvements in the Public Right -of -Way" entered into by and among the
City, The Waterfront Hotel, LLC, and Developer on or about February ,
2001 (the "License Agreement"), constitutes a default under this Lease. The
party who so fails or delays must immediately commence to cure, correct, or
remedy such failure or delay, and shall complete such cure, correction or
remedy with reasonable diligence and, in any event, for monetary defaults
within thirty (30) days of such failure or delay, and for non -monetary
defaults within the time reasonably required for cure with reasonable
diligence, not to exceed one hundred and eighty (180) days plus any period
10
or periods of enforced delay required by Section 1314 of this Lease (the
"Cure Period")."
10. Paragraphs 15 and 16 of Section 1211(a) of the Form of Ground Lease (Attachment
No. 5 of the Existing Agreement) are hereby amended, and a new Paragraph 17 is hereby added
to said Section 1211(a), to read in their entirety as follows:
"15. Fall to perform any of Lessee's Hazardous Substances covenants;
16. Fail to perform any obligation of Lessee set forth in the License
Agreement referred to in Section 1201(a) hereof; or
17. Fail to perform or comply with any other material term or provision
hereof."
11. The third paragraph of the: Form of Parcel B Grant Deed (Attachment No. 6 of the
Existing Agreement) is hereby amended to read in its entirety as follows:
"This Grant Deed is made pursuant to that certain Amended and Restated
Disposition and Development Agreement by and Bemeen Grantor and
Grantee dated September 14, 1998, as amended by that certain First
Implementation Agreement to Amended and Restated Disposition and
Development Agreement dated May 15, 2000, and that certain Second
Implementation Agreement to Amended and Restated Disposition and
Development Agreement dated February 5 , 2001 (collectively, the
"DDA"), which is a public record on file at the offices of Grantor, located at
2000 Main Street, Huntington Beach, California 92648, and which is
incorporated herein by this reference. The Property is referrers to in the DDA
as "Parcel B."
12. The following language shall be added to the legal description attached as Exhibit A
to the form of Parcel B Grant Deed (Attachment No. 6 of the Existing Agreement):
"FURTHER EXCEPTING AND RESERVING THEREFROM, a perpetual non-
exclusive casement in favor of Grantor on, over and across a portion of the
Property consisting of degraded wetlands ("Easement") which area is more
particularly described on Exhibit "A -I" attached hereto ("Degraded Wetland
Area"), solely for the purposes set forth in that certain Open Space/Wetland
Preservation and Restoration Deed Restriction recorded against the Degraded
Wetland Area on December 19, 2000 as Instrument No. 20000689468 in the
Orange County Recorder's Office ("Deed Restriction"). The Easement reserved
hereunder by Grantor shall constitute a "conservation easement" in favor of
Grantor pursuant to California Civil Code Section 815.1. Until the Degraded
Wetland Area is conveyed from Grantee back to Grantor, all maintenance within
the Degraded Wetland Area shall be at Grantee's sole cost and expense. The
Easement reserved hereunder shall in no way amend, modify, reduce, or limit the
rights, restrictions, terms, covenants, conditions or obligations of Grantor and
Grantee under (i) the Deed Restriction; or (ii) that certain Second Implementation
Agreement to Amended and Restated Disposition and Development Agreement
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dated February 5 , 2001, including without limitation, Grantee's obligation to
convey the Degraded Wetland Area to Grantor. Grantor shall be entitled to all
available legal and equitable remedies in order to enforce the Easement reserved by
Grantor hereunder, including without limitation, the remedies provided for in
California Civil Code Section 815.7."
In addition, the legal description of the Degraded Wetland Area shall be attached as
Exhibit "A -I" to the form of Parcel B Grand Deed.
13. Paragraph 22 of the First Implementation Agreement is hereby deleted.
14. The Schedule of Feasibility Gap Payments (Attachment No. 8 of the Existing
Agreement) is hereby deleted in its entirety and Attachment No. 8 attached hereto is substituted
in its place and stead.
15. Recital A of the Form of Memorandum of Lease and Right of First Refusal
(Attachment No. 10 of the Original Agreement, as modified by Paragraph 31 of the First
Implementation Agreement) is hereby amended to read in its entirety as follows:
"A. Agency and Lessee have entered into that certain Amended and
Restated Disposition and Development Agreement dated as of
September 14, 1998, as amended by that certain First
Implementation Agreement to Amended and Restated Disposition
and Development Agreement dated as of May 15, 2000, and that
certain Second Implementation Agreement to Amended and
Restated Disposition and Development Agreement dated as of
February 5 , 2001 (collectively, the `Agreement')."
16. in the third line of the second paragraph of the Form of Release of Construction
Covenants (Attachment No. 1 I of the Original Agreement, as modified by Paragraph 32 of the
First Implementation Agreement), the following phrase shall be added after the date
September 14, 1998: 'as amended by that certain First Implementat ion Agreement to Amended
and Restated Disposition and Development Agreement dated as of May 15, 2000, and that
certain Second Implementation Agreement to Amended and Restated Disposition and
Development Agreement dated as of February �, 2001 (collectively, the `Agreement')."
17. Except as set expressly set forth herein, each and every term set forth in the Existing
Agreement shall remain in full force and effect.
18. This Second Implementation Agreement may be executed by Agency and Developer
in different counterparts and the signature pages combined to create a single document binding
on both Parties.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK. SIGNATURE
PAGE FOLLOWS.]
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0
IN WITNESS WHEREOF, the parties have executed this Second Implementation
Agreement to Amended and Restated Disposition and Development Agreement as of the date set
forth above.
Dated: -Z t( 10 , 20001
ATTEST:
Agency Clerk
REVIEWED AND APPROVED
Ray Sil , Executive Director
APPROVED AS TO FORM:
Kane, Ballmer & Berkman
Agency Special Counsel
Dated: Jan. 29 , 2001
Dated: Jan. 29 92001
Hh'.wA2nd1mpag2
"AGENCY"
REDEVELOPMENT AGENCY OF THE
CITY OF HUNTINGTON BEACH,
a public body, corporate and politic
By:1 Ll� -1,1
t,Kain-nan
APPROVED AS TO FORM:
Agency General Counsel r wy-) a
INITIATED AND APPROVED:
Director of Economic Development
"DEVELOPER"
MAYER FINANCIAL, L.P.,
a California limited partnership
By: RLM Management, Inc., a Califomia
corporation, its General Partner
obert L. Mayer, Chie Executive Officer
By: �
Robert a cr, r., Secretary
.In
SC EDULE OF FEASIBILITY GAP PAYMENTS
(a) Subject to all of the terms and conditions of this Agreement (including, without
limitation, the provisions of paragraph (d) below limiting the Agency's payment obligation
hereunder to particular sources of funds), the principal amount payable by the Agency to
Developer under this Attachment No. 8 shall be an amount equal to the sum of the following:
(1) the amount of Sixteen Million Dollars ($16,000,000) for all or a portion of
the costs incurred by Developer for the following:
(A) payment of the sum of $9,391,839 advanced by Developer
pursuant to Sections 108 and 701 of this Agreement and in connection with the implementation
of the Driftwood Agreement for the acquisition of Mobilchomes and payment to the former
owners and occupants of the Driftwood Mobilehome Park pursuant to the Driftwood Agreement;
(B) the removal or remediation of hazardous substances on, in or under
the portion of the Site located within the dedicated public rights -of -way for Pacific View Drive,
Twin Dolphin Drive, Pacific Coast Highway, and/or Beach Boulevard;
(C) the construction of a publicly owned pedestrian bridge over Pacific
Coast Highway in accordance with the Scope of Development and plans approved by the City
pursuant to the Agreement;
(D) the first $350,000 of costs incurred by the City for the relocation of
the City's Beach Maintenance Facility in accordance with plans first approved in writing by the
City and/or Agency;
(E) construction and installation of public inf-astmc ture within
dedicated public rights -of -way in accordance with the Scope of Development and plans approved
by the City pursuant to this Agreement; and
(F) clearance of existing improvements on the portion of the Site
located within dedicated public rights -of -way that are inconsistent with the development of the
public improvements contemplated by this Agreement and excavation, grading, and other similar
activities necessary to prepare said public rights -of -way for development of said public
improvements.
(2) amounts set forth in the Certified Cost Statement, as defined in paragraph
(i) below, for the following:
(A) that portion, if any, of the cost of relocating the City's existing
Beach Maintenance Facility to a location off of the Site, which exceeds Three Hundred Fifty
Thousand Dollars (S350,000) and does not exceed Seven Hundred Fifty Thousand Dollars
($750,000);
ATTACHMENT NO. 8
(B) costs incurred by Developer for the Utilities Undergrounding
within dedicated public rights -of -way in accordance with the Utilities Undergrounding Budget,
as defined in Section 307 of this Agreement; and
(C) the sum of Thirty -Six Thousand Dollars ($36,000), which sum the
parties agree equals filly percent (50%) of the actual and reasonable cost incurred by Developer
for the demolition, clearance and removal from the Site of those Mobilehomes that were partially
or entirely located within the dedicated public rights -of -way of Pacific View Drive and/or Twin
Dolphin Drive.
(3) In no event shall Developer be entitled to payment or reimburs ement from
Agency for any "construction, alteration, demolition, or repair work" (as said phrase is defined in
Labor Code § 1720(a)) other than for those certain public facilities and improvements identified
in subparagraphs (1) and (2) above which are to be constructed and installed by Developer
within dedicated public rights -of -way.
(b) The Agency and Developer shall use their reasonable best efforts to assist the City
in obtaining a loan from the United States Department of Housing and Urban Development
("HUD") in the approximate amount of six million dollars ($6,000,000), to be applied to
reimburse a portion of Developer's costs described in paragraph (a) above. The principal amount
of the Agency's obligation under this Attachment No. 8 shall be reduced on a dollar -for -dollar
basis to the extent the proceeds of such a loan are used to reimburse, wholly or in part, any of the
costs described in paragraph (a) above, and the amount of Eligible Costs, as defined in paragraph
0) below, deemed paid as of specified dates for the purpose of calculating interest hereunder
pursuant to paragraph (c) below shall be modified to reflect the amount and time of any such
reduction. The Agency and Developer acknowledge and agree that the obtaining of the loan
described in this paragraph (b) is subject to the final approval of the City and HUD.
(c) The principal amount owing by Agency to Developer as set forth in this
Attachment No. 8 shall bear interest at a rate equal to Developer's Cost of Funds, as defined in
paragraph 0) below, from the imputed dates of Developer's payment of Eligible Costs. as defined
in paragraph 0) below, as specified in this paragraph (c) below until the date of payment by
Agency to Developer hereunder. Payments by Agency shall first be credited to accrued interest
and then to reduction of outstanding principal.
(i) Solely for purposes of calculating the amount of interest payable
hereunder, funds advanced by Developer pursuant to Sections 108 and 701 of this Agreement to
implement the Driftwood Agreement shall accrue interest as of the date advanced to the Agency;
provided, however, that if Developer is not at all times in full compliance with the Schedule of
Performance date for completion of construction of the resort hotel on Parcel A, the amount of
EIi&ible Costs deemed to have been paid by Developer shall be reduced by ten percent (10%) per
annum applied on a pro rata basis for the period of time Developer is not in compliance with the
Schedule of Performance dates for commencement and completion of construction.
(ii) Solely for purposes of calculating the amount of interest payable
hereunder, Developer shall be deemed to have paid an amount equal to one-third of the
difference between $16,000,000 and the amount advanced under Section (c)(i) of this
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Attachment No. 8 in Eligible Costs (exclusive of the amount deemed paid pursuant to (i) above)
as of one hundred and eighty (180) days after the Efleetive Date of the Parcel A Lease; provided,
however, that if Developer is not at all times in full compliance with the Schedule of
Performance date for completion of construction of the resort hotel on Parcel A, the amount of
Eligible Costs deemed to have been paid by Developer as of such date shall be reduced by ten
percent (10%) per annum applied on a pro rata basis for the period of time Developer is not in
compliance with the Schedule of Performance dates for commencement and completion of
construction.
(iii) Solely for purposes of calculating the amount of interest payable
hereunder, Developer shall be deemed to have paid an amount equal to one third of the
difference between S16,000,000 and the amount advanced under Section (c)(i) of this
Attachment No. 8 in Eligible Costs (exclusive of the amounts deemed paid pursuant to (i) and
(ii) above) as of two hundred and seventy (270) days after the Effective Date of the Parcel A
Lease; provided, however, that if Developer is not at all times in full compliance with the
Schedule of Performance date for completion of construction of the resort hotel on Parcel A, the
amount of Eligible Costs deemed to have been paid by Developer as of such date shall be
reduced by ten percent (10%) per annum applied on a pro rata basis for the period of time
Developer is not in compliance with the Schedule of Performance dates for commencement and
completion of construction.
(iv) Solely for purposes of calculating the amount of interest payable
hereunder, Developer shall be deemed to have paid all costs of demolition, clearance and
removal of those Mobilchomes located within the dedicated public rights -of -way pursuant to
paragraph (a)(2)(C) of this Attachment No. 8 as of May 1, 1999.
(v) Solely for purposes of calculating the amount of interest payable
hereunder, Develops.-r shall be deemed to have paid all Eligible Costs (exclusive of the amounts
deemed paid pursuant to (i), (ii), (iii) and (iv) above) as of the later to occur of (A) three hundred
and sixty (360) days after the Effective Date of the Parcel A Lease; or (B) the date on which
Developer submits a Certified Cost Statement to the Agency, provided, however, that if
Developer is not at all times in full compliance with the Schedule of Performance date for
completion of construction of the resort hotel on Parcel A, the amount of Eligible Costs deemed
to have been paid by Developer as of such date shall be reduced by ten percent (10%) per annum
applied on a pro rats basis for the period of time Developer is not in compliance with the
Schedule of Performance dates for commencement and completion of construction.
(d) The obligations of the Agency under this Attachment No. 8 shall be special and
limited obligations payable to Developer solely from the sources of funds expressly identified in
this Attachment No. 8; provided, however, that if and to the extent Agency is in breach of its
obligations to make payments from the funds specified herein, then such Agency obligations
shall to such extent be payable from any source of Agency funds lawfully available for such
purpose. Subject to the provisions of the immediately preceding sentence, the Agency shall have
no obligation to pay any amounts to Developer pursuant to this Attachment No. 8 except as
follows:
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(i} The following conditions precedent to each payment hereunder shall be
satisfied:
(A) Subject to the provisions of paragraph (e) below, the Completion
Date, as define in paragraph 6) below, shall have occurred; and
(B) Developer shall not have failed to cure any default within the
applicable Cure Period as to any of its obligations relating to Parcel A under this Agreement and
the Parcel A Lease.
(C) If Community Facilities District bonds or similar instruments have
been issued pursuant to paragraph (f) of this Attachment No. 8, Developer shall have paid all
special taxes (and any related penalties, costs, fees or other charges) due in connection with such
bonds or similar instruments and Shall be in full compliance with all of its other obligations in
connection with such bonds or similar instruments.
(ii) On or prior to September 30 of each year, beginning with the first
September 30 which follows the Completion Date, and continuing until the first to occur of
(A) the September 30 which follows the twentieth (20th) anniversary of the Completion Date, or
(B) the date on which the amount specified in paragraphs (a) and (c) above (1 ess any amount(s)
paid pursuant to paragraph (b) above) has been paid in full, the Agency shall pay to Developer,
in repayment of all amounts owed Developer pursuant to paragraphs (a) and (c) of this
Attachment No. 8 (less amounts paid to Developer pursuant to paragraph (b) of this Attachment
No. 8) an amount equal to the lesser of (i) one hundred percent (100%) of Available Site -
Generated Property Tax Increment, as defined in paragraph 0) below, received by the Agency
during the prior Agency fiscal year (July 1-June 30), or (ii) such portion of such Available
Site -Generated Property Tax Increment received by the Agency during the prior Agency fiscal
year that is sufficient, when added to the Available Site -Generated Transient Occupancy Tax to
be paid to Developer for such fiscal year by Agency pursuant to this Attachment No. 8, to repay
all funds owed by Agency to Developer pursuant to this Attachment No. 8, plus interest, within a
twenty (20) year amortization period commencing with the first September 30 which follows the
Completion Date. Agency hereby covenants to take all actions required by law to receive the
Available Site -Generated Property Tax Increment, including but not limited to the timely filing
of statements of indebtedness pursuant to California Health and Safety Code Section 33675.
(Ili) On or prior to September 30 of each year, beginning with the first
September 30 which follows the Completion Date, and continuing until the first to occur of
(A) the September 30 which follows the twentieth ( 20th) anniversary of the Completion Date, or
(B) the date on which the amount specified in paragraphs (a) and (c) above (less any amount(s)
paid pursuant to paragraph (b) above) have been paid in full, the Agency shall pay to Developer,
in repayment of all amounts owed Developer pursuant to paragraphs (a) and (c) of this
Attachment No. 8 (less amounts paid to Developer pursuant to paragraph (b) of this Attachment
No. 8), an amount equal to the lesser of (i) one hundred percent (100%) of the Available Site -
Generated Transient Occupancy Tax, as defined in paragraph 6) below, received by Agency
during the prior Agency fiscal year (July 1-June 30) or (ii) such portion of such Available Site -
Generated Transient Occupancy Tax that is sufficient, when added to the Available Site -
Generated Property Tax Increment to be paid to Developer for such fiscal year by Agency
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pursuant to this Attachment No. 8, to repay all funds owed by Agency to Developer pursuant to
this Attachment No. 8, plus interest, within a twenty (20) year amortization period commencing
with the first September 30 which follows the Completion Date. Agency hereby covenants to
refrain from taking any action which would diminish or impair in any way its receipt of
Available Site -Generated Transient Occupancy Tax.
(iv) The annual sum of Available Site -Generated Property Tax Increment and
Available Site -Generated Transient Occupancy Tax "that is sufficient to repay all funds owed by
Agency to Developer pursuant to this Attachment No. 8, plus interest, within a twenty (20) year
amortization period commencing with the first September 30 which follows the Completion
Date," as provided for in subparagraphs (ii) and (iii) of this paragraph (d), shall be recalculated
prior to each September 30 during the 20-year amortization period to account for all of the
following: (A) prepayments of Agency's obligations pursuant to paragraph (e) of this
Attachment No. 8; (B) any annual payment by Agency less than the amount sufficient to fully
amortize the payments due to Developer over a 20-year amortization period based upon the
amortization schedule then in effect; and (C) any adjustments in the Developer's Cost of Funds
after the date that the amortization schedule then in effect was prepared. Consider the following
examples:
Example l: Assume that, pursuant to paragraph (e) of this Attachment No. 8,
Agency prepays $8 million to Developer prior to the Completion Date. In such event,
said $8 million prepayment shall be applied first to reduce accrued and unpaid interest
then owing to Developer, the balance of said $8 million shall next be applied to reduce
outstanding principal owing to Developer for Eligible Costs, and the 20-year amortization
schedule (and the first annual maximum Agency payment due to Developer on the
September 30 first following the Completion Date) shall be calculated based upon the
remaining principal balance owing to Developer, plus accrued interest on said amount
from the date of Agency's $8 milIion prepayment through the first September 30
following the Completion Date, and using the then -applicable Developer's Cost of Funds.
Example 2: Assume the same facts set forth in Example 1. Assume further that
the sum of the Available Site -Generated Property Tax Increment and Available Site -
Generated Transient Occupancy Tax available for payment by Agency to Developer on
the first September 30 following the Completion Date is less than the amount needed to
fully repay all funds owed by Agency to Developer pursuant to this Attachment No. 8,
plus interest, within a 20-year amortization schedule (assuming that the subsequent 19
annual payments were the same). In such event, Agency shall pay to Developer on said
September 30 the sum of the Available Site -Generated Property Tax Increment and
Available Site -Generated Transient Occupancy Tax received by Agency during the prior
Agency fiscal year, the difference between the actual Agency payment and the amount of
the payment that would have been needed to fully repay all funds owed by Agency to
Developer within a 20-year amortization schedule shall be taken into account in order
that a revised amortization schedule can be prepared, and the amortization schedule for
the remaining 19 years shall be adjusted accordingly.
Examtzl_e 3: Assume the same facts set forth in Example 1. Assume further that
the sum of the Available Site -Generated Property Tax Increment and Available Site-
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Generated Transient Occupancy Tax available for payment for Agency to Developer on
the first September 30 following the Completion Date is more than the amount needed to
fully repay all funds owed by Agency to Developer pursuant to this Attachment No. 8,
plus interest, within a 20-year amortization schedule (assuming that the subsequent 19
annual payments were the same). Assume further that Agency elects pursuant to
parag7aph (e) of this Attachment No. 8 to prepay Developer the "excess" portion of the
Available Site -Generated Transient Occupancy Tax generated during the prior fiscal
year. In such event, the amount of prepayment shall be deducted from the sum of the
total outstanding principal and accrued interest then owing by Agency to Developer
hereunder and the amortization schedule for the remaining 19 years shall be adjusted
accordingly.
Examples 1, 2 and 3 are set forth herein for illustrative purposes only, and in the event of
any conflict between the provisions of said Examples and the text of this Agreement, the text of
this Agreement shall prevail.
(e) The Agency's obligations hereunder may be prepaid by the Agency, in whole or
in part, at any time and from time to time without penalty, from any source of funds, including,
without limitation, (i) monies advanced by HUD to the City under HUD's Section 108 loan
program and thereupon advanced by the City to the Agency and/or (ii) grants obtained through
HUD's Brownfields Economic Development Initiative Grant program. City is in the process of
attempting to secure such Section 108 loan in the amount of Six Million Dollars ($6,000,000)
and such Brownfields grant in the amount of Two Million Dollars ($2,000,000). In the event
that City is successful in securing all or a portion of said loan and/or grant funds, Agency agrees
to cause said funds to be transferred to Agency and to utilize said funds to pay a portion of
Agency's obligations to Developer, with said funds to be paid to Developer on or before the
latest of the following dates: (1) within thirty (30) days of receipt of such funds by City or
Agency from HUD (whichever entity receives the funds), (ii) the date Developer and Agency
closed escrow to Parcel A pursuant to this Agreement, (iii) the recordation of the construction
loan approved by the Agency as part of the evidence of financing required hereunder and the
funding thereof so as to make all necessary funds available for the development of Parcel A, and
(iv) the commencement of construction of the Parcel A improvements following such
construction loan recordation and funding. Such commencement of construction shall be
deemed to have occurred upon (a) receipt by the Agency of a true a nd correct copy of (i) a
binding construction contract for all remaining Parcel A improvements and (ii) a binding notice
to proceed from Developer to such contractor covering all such improvements, and (b) the
commencement of work on Parcel A in accordance therewith, such as the commencement of the
removal or moving of the dirt currently stored on Parcel A.
(f) (1) Agency and Developer shall use their reasonable best efforts to cause City
to approve the issuance of Community Facilities District bonds or similar instruments (the
"Bonds") in accordance with this paragraph (f) for the purpose of generating net proceeds to
finance Eligible Costs, upon the satisfaction of each and all of the following conditions precedent
to the approval of such an issuance:
Ell
(A) Agency's and City's determination that such an issuance is feasible
from a legal and marketing standpoint and would not materially adversely affect the financial
objectives of the Agency or the City.
(B) Agency's determination that the fair market valu a of the Site
(assuming that all public improvements are in place) is not less than 300% of the original gross
principal amount of the Bonds: and
(C) The close of escrow to Parcel A pursuant to this Agreement and
Developer's substantial commencement and diligent prosecution of construction on Parcel A in
accordance with this Agreement and the Parcel A Lease. For purposes of this requirement,
"substantial commencement" shall mean the pouring of not less than fifty percent (50%) of the
foundations and pile caps for the main Ocean Grand Resort (Parcel A) structure.
(2) The Bonds shall be amortized over a term of not less than twenty-five (25)
and not more than thirty (30) years, as determined by Agency or City to be optimal in
consultation with its or their financial advisor, underwriter, and Developer.
(3) The Bonds shall be secured solely by the pledge of the levy of a special
tax on Lessee's leasehold interest in Parcel A and the improvements to be constructed thereon
pursuant to this Agreement. Developer shall be solely responsible for payment of the special tax.
Developer hereby covenants and agrees to pay the special tax when due, and Developer's failure
to pay the special tax when due shall constitute a default relating to Parcel A under this
Agreement.
(4) Notwithstanding any provision of this Agreement to the contrary, the
Agency shall have no obligation to reimburse Developer for debt service, repayment of principal
or interest, penalties or any other amounts due in connection with the Bonds, including but not
limited to any amounts which may become payable as a result of Developer's failure to timely
pay special taxes and/or to timely perform Developer's other obligations in connection with the
Bonds.
(5) The Agency's payments and obligations un der this Attachment No. 8 shall
not be pledged to payment of the Bonds, and the Agency shall have no obligation to the
bondholders or any other third party (other than a permitted Transferee or Mortgagee of
Developer under this Agreement and/or the Parcel A Lease).
(6) Subject to all of the terms and conditions of this Agreement, the public
improvements activities for which Developer may receive reimbursement from proceeds of the
Bonds, and the approximate amount of each such reimbursement, are as follows:
(A) purchase of Mobilehomes for removal from the portions of the Site
located within the dedicated public rights -of -way for Pacific View Drive and/or Twin Dolphin
Drive, in the amount of $974,756;
(B) demolition of Mobilehomes located within the dedicated public
rights -of -way for Pacific View Drive and/or Twin Dolphin Drive, in the amount of 536,000;
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(C) demolition of the clubhouse and pads within the public right-of-
way, in the amount of 5282,544;
(D) demolition of the Huntington Beach Inn which was partially
located within the dedicated public rights -of -way for Pacific View Drive and/or Twin Dolphin
Drive, in the amount of 554,927;
(E) construction of Pacific View Avenue, Twin Dolphin Drive, Sunrise
Drive, and improvements associated therewith, in the approximate amount of 54,386,059;
(F) dedication of land (under Pacific View Avenue and Twin Dolphin
Drive) to the City of Huntington Beach, in the approximate amount of 54,142,500;
(G) construction of the publicly owned pedestrian overcrossing of
Pacific Coast Highway adjacent to Parcel A, in the approximate amount of S 1.900,000;
(H) relocation of the City's Beach Maintenance Facility, in an amount
not to exceed $750.000;
(I) any other public improvements and site preparation activities
relating to public improvements that City/Agency and Developer may mutually agree are eligible
for funding through the Bonds, in the amount reasonably approved by the City therefor; and
(J) accrued interest on any of the foregoing items calculated in
accordance with paragraph (c) of this Attachment No. 8."
(7) The Bond documents shall provide that Developer shall receive
reimbursement from Bond proceeds for costs actually and reasonably incurred by Developer
after October 31, 1998, in connection with a reimbu rsable item specified in clause (A), (B), (C),
(D), (E), (F), (G), (H), or (1) above, and accrued interest as provided in clause (J) above, not to
exceed the maximum dollar amounts specified above for each such item for which a maximum
dollar amount is specified, only after satisfaction of all conditions precedent applicable to such
reimbursement as may be set forth in the Bond documents, and consistent with any applicable
conditions of approval imposed by the City in connection with approving entitlements for the
development of Parcel A of the Site as may be relevant to each eligible item of reimbursement,
and provided that Developer shall be in full compliance with all of its obligations under this
Agreement, including without limitation the obligations specified in this Attachment No. 8.
(8) A portion of the proceeds of the Bonds shall be paid to the City and/or the
Agency to cover costs of issuance, as reasonably determined by the City and/or the Agency. The
costs of issuance shall include, without limitation, the cost of appraisals conducted prior to, on or
after the date of issuance.
(g) The Agency's obligation to pay Available Site -Generated Tax Increment in
accordance with this Attachment No. 8 shall be subordinate to the Agency's existing bonded
indebtedness and bond issuance(s) and the refunding or refinancing thereof and any future bonds
the Agency may issue and the bonded indebtedness incurred in connection therewith, provided
that the Agency determines at the time of issuance of any such future bonds that such issuance
and indebtedness will not materially adversely affect the Agency's ability to perform its
obligations under this Attachment No. 8. Bonded indebtedness includes any indebtedness
incurred by the Agency for bonds, notes, interim certificates, debentures, certificates of
participation or other obligations issued by the Agency. The Agency's obligation to pay a portion
of Available Site -Generated Property Tax Increment to Developer under this Attachment No. 8 is
not and shall not be construed as a "pledge" of property tax revenues for purposes of Section
33671.5 of the Community Redevelopment Law.
(h) This Attachment No. 8 is part of the Agreement and is subject to all of the terms
and conditions thereof.
(1) The Agency shall have the right a t its option and as a non-exclusive remedy to set
off amounts owed by Developer to the Agency relating to Parcel A obligations against amounts
payable by the Agency under this Attachment No. 8.
0) The following definitions shall apply to this Attachment N o. 8:
(1) "Agreement" as used herein shall mean that certain Amended and Restated
Disposition and Development Agreement by and between Agency and Developer dated as of
September 14, 1998, as amended by that certain First Implementation Agreement to Amended
and Restated Disposition and Development Agreement dated as of May 15, 2000, and that
certain Second Implementation Agreement to Amended and Restated Disposition and
Development Agreement dated as of February 5 , 2001, of which this Attachment No. 8 is a
part.
(2) "Available Site -Generated Property Tax Increment" means the total
ad valorem property tax increment revenue allocated to and received by Agency pursuant to
Section 33670(b) of the California Health and Safety Code, as said statute may be amended from
time to time, by application of the one percent (1 %) tax le-,ried against real property as permitted
by Article XIIIA of the California Constitution, in an amount attributable by the Orange County
Assessor solely to Parcel A, plus any Developer property tax assessment in -lieu payments
received by Agency pursuant to the Parcel A Lease, but specifically excluding therefrom all of
the following: (A) a portion of tax increment revenues from Parcel A equal to the twenty percent
(20%) of such revenues from the redevelopment project area as a whole that the Agency is
required to set aside pursuant to Sections 33334.2 et sN. of the California Health and Safety
Code or any successor law for low- and moderate -income housing purposes; and (B) a portion of
tax increment revenues from Parcel A equal to the revenue from the redevelopment project area
as a whole that the Agency is required to pay to any and all governmental entities pursuant to any
provision of law, as amended from time to time, or, for the Main -Pier component of the Merged
Redevelopment Project Area only, pursuant to tax sharing/pass-through agreements (including
any and all agreements entered into prior to this Agreement by and Agency and such
governmental entities implementing the tax sharing/pass-through agreements); and (C) a portion
of tax increment revenues from Parcel A equal to the percentage of such revenues in the
redevelopment project area as a whole which the Agency may be required by the State of
California to pay from time to time, including, for example, and without limiting the generality
of the foregoing, any payments which the Agency may be required to pay to the Education
Revenue Augmentation Fund pursuant to Section 33681 et sm. of the Community
W
Redevelopment Law, provided, however, that Developer does not waive or release any right to
claim that the division of Agency funds for any such purposes constitutes an unconstitutional and
unlawful impairment of Developer's contractual rights hereunder; and (D) the amount of any
revenues received by the Agency which are attributable to any special taxes or assessments or
voter -approved indebtedness; and (E) charges for County administrative charges, fees or costs
equal to the percentage of such charges in the Project Area as a whole.
For purposes of determining the amount of "Available Site -Generated Property Tax
Increment" attributable solely to Parcel A. as that term is defined in the foregoing paragraph
0)(2), the base year valuation attributable to Parcel A pursuant to Section 33670(a) of the
California Health & Safety Code shall be deemed to be Nine Hundred and Seventy -Eight
Thousand Four Hundred and Sixteen Dollars and Sixty -Four Cents (5978,416.64).
(3) "Available Site -Generated Transient Occupancy Tax" as used herein shall
mean the sum of (i) five -sixths (5/6ths) of the transient occupancy tax revenue actually paid to
and received by the Agency pursuant to Ordinance No. 2974 of the City of Huntington Beach
and Ordinance No. I of the Agency in any fiscal year following the Completion Date of the hotel
to be constructed on Parcel A by Developer pursuant to and in accordance with the Agreement,
less, in the event the Agency uses monies advanced by the City from the HUD Section 108 Loan
referred to in paragraph (b) of this Attachment No. 8 to make a prepayment to Developer
pursuant to paragraph (e) of this Attachment No. 8, (ii) an amount equal to the annual principal
and interest payment required to be made by City or Agency to HUD to repay the HUD
Section 108 Loan (utilizing a 20-year payment schedule) and the applicable interest rate City is
required to pay pursuant to the Section 108 Loan, and less (iii) amounts needed to reimburse the
City or Agency for said HUD Section 108 loan repayments made utilizing funds other than
transient occupancy tax revenue received by the Agency pursuant to said Ordinance Nos. 2974
and 1.
(4) "Certified Cost Statement" as used herein shall mean a statement, prepared
and certified by Developer's chief financial officer following the completion of all items
describe in paragraph (a)(2) above, fully supported by books and records subject to inspection
by the Agency pursuant to Section 605 of the Agreement, which accurately sets forth the amount
of each cost described in paragraph (a)(2) above and describes in reasonable detail the nature of
each such cost.
(5) "City" as used herein shall mean the City of Huntington Beach.
(6) "Completion Date" as used herein shall mean the date on which the
Release of Construction Covenants to be issued by Agency pursuant to the Agreement with
respect to the improvements to be constructed by Developer on or in connection with Parcel A is
recorded in the Official Records of Orange County, or such earlier date as may be determined by
the Agency's Executive Director in his sole and absolute discretion.
(7) "Developer's Cost of Funds" as used herein shall mean the interest rate
paid by the Developer on funds advanced or expended by Developer for the items for which the
Agency is obligated to reimburse the Developer pursuant to this Attachment No. 8 (including
without limitation the payment required to comply with the Driftwood Agreement), not to exceed
9 HI
the lesser of (A) the interest rate payable by Developer from time to time on a loan which is
secured by the lien and charge of a first deed of trust to which Developer's leasehold interest in
Parcel A is subject as permitted by this Agreement and the Parcel A Lease or the rate on other
secured or unsecured financing obtained for such Developer advance or expenditure purposes
subject to the approval of the Agency's Executive Director; or (B) the maximum rate permitted
by law for bonded indebtedness of the Agency; or (C) commencing upon the date of issuance of
the Community Facilities District Bonds referred to in paragraph (0 of this Attachment No. 8,
the total interest rate payable in connection with the repayment of such CFD Bonds (up to the
amount of the net proceeds of the CFD Bonds so paid to Developer). "Total Interest Rate" as
used herein means the total present value of all interest payments throughout the life of the
bonds, divided by the gross bond proceeds less any capitalized interest and any amount placed in
a reserve fund.
(8) "Eligible Costs" as used herein means the costs actually and reasonably
incurred by Developer for the items described in paragraph (a) of this Attachment No. 8. To the
extent applicable, "Eligible Costs" shall include all direct and indirect costs incurred for
planning, design, engineering, construction, installation, supervision, and inspection of the public
improvements in question and the cost of obtaining any governmental permits or approvals
therefor, not to exceed however the dollar amounts in total and for each item set forth in the
Agreement and this Attachment No. 8. In no event shall Developer be entitled to payment or
reimbursement from Agency for any 'construction, alteration, demolition, or repair work' (as said
phrase is defined in Labor Code § 1720(a)) other than for those certain public facilities and
improvements identified in subparagraphs (1) and (2) above which are to be constructed and
installed by Developer within dedicated public rights -of -way.
(k) The Agency agrees to cooperate with the Developer and exercise its reasonable
best efforts to secure any appropriate reductions of City fees or increases in credits applicable to
the project.
Fth-..W QndImpag-FeasGap2
�J
�r--
)A KTIRGTom BE-ACf4
0
CITY OF HUNTINGTON BEACH
CITY COUNCIL MEMO
—M _ _
To: Council Members and City Administrator -
From: Connie Boardman
Date: February 2, 2001 '
Subject:
Agenda item F-3
As part of agenda item F-3 the council will be voting to approve the second Implementation
Agreement to Amended and Restated Disposition and Development Agreement between the
Redevelopment Agency and Mayer Financial, L.P. As part of the agreement, the city is to convey
parcel "B" which includes the Little Shell wetlands. Also, as part of this agreement, the Mayer
Corporation will deed this property back to the city as soon as practicable after the conveyance.
The Huntington Beach Wetlands Conservancy has expressed an interest in maintaining and
managing the wetland during the interim period when the city does not own the property. At the
council meeting I will be proposing we add the following to the recommended staff action*
Accept and approve the Second Implementation Agreement to Amended and Restated
Disposition and Development Agreement between the Redevelopment Agency of the City of
Huntington Beach and Mayer Financial L-P. with the following stipulation:
The council directs staff to facilitate a memorandum of understanding between the Huntington
Beach Wetlands Conservancy, Mayer Financial, L.P. and the City of Huntington Beach for interim
maintenance and management of the Little Shell Wetlands while the wetland area is not owned
by the City.
LAk COWIANICPT�0N
214101 at 11 15 AM loan D Vandersloot, MD (949) 548.6326
JAN U. VANI ERSLOOT, M.P.
��21 l;ast )"Street Iliomr Ph�me (949) 54S c;32C
\ewpon Beach, CA 92663 Office FAX (714) 84S-6643
Iebruary 5. 2001
L)avid C- Nees
Director of Economic Development
City of I luntington Beach
1-000 Main Street
luntinuton Beach. CA 92649 _
o
Re- Little Shell Wetlands _a
Request for Public Acccss � c
Item F-3 on the 1-113 City Council :agenda. February 5. 2001 � c
Dear David.
Pursuant to our meetinsr last Friday, I cbruarN2, 2000, I am submitting a request for public ac`cess=�
to the I -title Shell �l ctlands, as well as permission to perform cleanup and maintenance behind 3-
the fenced area- As you know. at the meeting tonight. (Item h-3), the wetlands will be transferred
to the temporar\ ownership ofthe \•layer Corporation, which could conceivably deny public
access. ahercas currently the land belongs to the City acting as the Redevelopment Agenc}'.
As 1 stated at tits meeting, the Dced Restriction approved by the City Redevelopment :agency on
November 20. 2000 contained paragraph 5 cm page -t which stated: "Future Conveyance of'
Dourradrd ���etland :\Veil. The Agency may at anytime convey' the Degraded Welland Area-
scparate and apart fi-orn the balance of the Property. to (lie City or any other public agency for
\cctland reSloration and other purposes subject and consistent with the Deed Restriction."
I-ioweyer. the Uegraded Wetlands Area (Little Shell) will be con c)-cd by the Agency to a private
corporation. the Mayer Corporation. by virtue of F-3 on the agenda tonight. as part of'Parccl 13_
'f his action would give control of the Degraded Welland Area to a private corporation which
could then restrict access. cleanup. maintenance, etc_, until the appropriate subdivision maps and
coastal development permits «cre sought by the private corporation, a time which may take up to
20 months. acconling to Howard Zcicvskti--
An action more consistent with the Deed Restriction %vould be to convey the Degraded Weiland
Area to the Cite. separate and apart from the balance of the Property- Mire City could then arrange
.%ith a non-profit such as the Huntington Beach \Wetlands Conscrvancy or public members to
perform maintenance. cleanup. restoration, etc_, and to allow public access for such activities_
I have contacted Debra Bove of the Coastal Commission (415) 904-5233. She may be able to get
it letter to the Council for the meeting tonight.
Thank you for your consideration -
Sincerely.
Jan 17_ Vandersloot. \f) (Ott -ice Phone Number after 1 P\,L 714-848-0770)
cc: Ray Silver. Corrn-te Broc:kv.-ay
Page.2
lq� COMM
�nNICA�IoN ��3
214101 at 11 14 AM Jan D Vande•sloot MD (949) 548-6326 _
Page 1
From the desk of...
Brockway, Connie
City Cierk
City of Hintingtor Beach
Fax Number- 1 714 - 374-1557
Voice Number 1 714 - 536-5227
Subject
Vandersloot, Jan
Fax (949) 548-6326
Voice (949) 548-6326
'Vuriber of Pages 2 214101 11 07 AM
Copynght,--, 1996-1997 Intel Corporation All ngh,s reserved
Lhle CcMMUNICAI''rN
N
Conveyance of the
Residential Site - Parcel B
• The Agency is required to convey the
property to the Developer as outlined in the
Amended and Restated Disposition and
Development Agreement of September 14,
1998.
• The Degraded Wetland Area cannot be
separated at this time. A new parcel map
will have to be created and recorded. This '
process will take several months.
i
J
- Key Provisions of the -
i
2nd Implementation
p
j Agreement
• Acknowledges the Settlement Agreement
with the Coastal Commission to protect the
Degraded Wetland Area on a portion of the
property to be conveyed and ultimately to i
be developed witli residential units. j
• 'Fhe number of residential units to be j
developed is reduced from 150 to 120.
HB
Key Provisions of the
2nd Implementation
Agreement
• Deletes the requirements of the Developer
to complete the wetland mitigation at the
Shippley Nature Center.
• Modifies the schedule pertaining to the
commencement of the construction of the
residential units.
Key Provisions of the
2nd Implementation
Agreement
• Acknowledges the License Agreement
entered into by the City, the Waterfront
LLC and the Developer to construct the
pedestrian overcrossing, provide
landscaping and construct other
improvements in the Public Right -of -Way.
VO
4
Key Provisions of the
2nd Implementation
Agreement
• Restricts and clarifies the eligible costs for
which the developer is required to make
payments or be entitled to reimbursements
from the Agency.
• Requires the Developer to convey the
Degrade Wetland Area of the residential site
back to the Redevelopment Agency at the
earliest opportunity.
Recommended Action
• Accept and approve the Second
Implementation Agreement between the
Redevelopment Agency of the City of
Huntington Beach and Mayer Financial, L.P.
• Authorize Agency Chairman and Agency
Clerk to Execute the Second Implementation
Agreement.
The End
•
RCA ROUTING S1,EET F
INITIATING DEPARTMENT: Economic Development
SUBJECT: Ocean Grand Resort
COUNCIL MEETING DATE: February 5, 2001
RCA ATTACHMENTS
STATUS
Ordinance (wlexhibits & legislative draft if applicable)
Not Applicable
Resolution (wlexhibits & legislative draft if applicable)
Not Applicable
Tract Map, Location Map and/or other Exhibits
Not Applicable
Contract/Agreement (wlexhibits if applicable)
(Signed in full by the City Attorney)
Attached
Subleases. Third Party Agreements, etc.
(Approved as to form by City Attomey)
Not Applicable
Certificates of Insurance (Approved by the City Attorney)
Not Applicable
Financial Impact Statement (Unbudget, over $5,000)
Not Applicable
Bonds (If applicable)
Not Applicable
Staff Report (If applicable)
Not Applicable
Commission, Board or Committee Report (If applicable)
Not Applicable
Find ingslConditions for Approval andlor Denial
Not Applicable
EXPLANATION FOR MISSING ATTACHMENTS
REVIEWED
RETURNED
FORWARDED
Administrative Staff
( )
(J,}
Assistant City Administrator (Initial)
( }
( }
City Administrator (Initial)
City Clerk
( )
EXPLANATION FOR RETURN OF ITEM:
•
�a
�z_ IS-ez
CALIFORNIA PRELIMINARY 20 DAY NOTICE
115E PROOF OF SERVICE AFFIDAVIT OF CALIFORNtA PREL11AMARY 20—DAY NOTICE ON THE REVERSE SIDE
(PUBLIC AND PRIVATE MWOR19
IN ACCORDANCE VKTH SECTION 3097 AND 3099. CALIFORNIA CIVIL CODE
CONSTRUCTION [ENDER or
Reputed Construction L eoder. if any
NONE REPORTED
FOLD HERE.
OWNU OR PUBLIC AGENCY
Or Reputed Owner (an public work)
(tic private wait)
� `18
Construction loan no.
Se
FOLD HERE
ORIGINAL CONTTTIACTOR or
Reputed Coatracror, if any
McBRIDE ELECTRIC, INC.
2206 S. WRIGHT ST.
SANTA ANA, CA 92705
NONE
FOLD HERE
SUBCONTRACTOR
With whom clairr a has contacted
(if krrowo)
6
YOU ARE HEREBY NOTED THAT
McBride Electric, Inc
2206 S. Wright St.
Santa Ana, CA 92705 714-751-38"
forme and addrt:n of P=— or firm sender)
has fumished or will furnish labor, setviocs equipment or
matemis of the following general description
Electrical services of labor and materials.
LPr�le.•.tr�r.._.r�.ww.r
for the b-uilldmther g structure or owork of Lmprovemcrtt located
tf I (�l'f
at. L �i 1 g 201V
100 i
The rtarne of the palm or firm abo 0000-acted for t* pur thaw
Of such labor. s mvwM o"gwoan or tmterials-
NOTICE TO PROPERTY OWNER
if bills are mot paid in fall for the tabor, services, egaipmeat, or
materials fornished or to be frraished. it mechanic's bee leading to
the loss, through court fortclosure proceedings, of all or part of your
property being so improved may be placed against the property even
thoejb you have paid you contractor in & L Yoe may wisb to
protect yourself against IAfs eamsegaeace by (1) requiring your
contractor to famish a sigaed release by the pentioa or firm SMul
you this notice below making payment to your eostrmetor or (2) toy
other method or device that Is appropriate modcr the dmonastances.
The person or firm UvM dus oarwc is merited, pursuers w ■ aollootrw brp mnW
avocrrgm to pay a bw beoefm too to cqnw ww lied (desm-bed
m CrA Cade 03111). and lird is identified m fiAkw s; (strax it pliable)
K/A
(norm)
(otne)
(ad"t n)
(omnc)
Mailed this date:
Administrative M
( ) (talc)
An connate of the total price of the labor, services, equ?pment or
euterials furnished or to be furnisbed w
S;V:5-O 1
(PLEASE NM REVERSE SiDEI
U
o CALIFORNIA PRELIMINARY 20 DAY NOTICE
1
U USE PROOF OF SERVICE MMAViT OF CALWORNIA PRELMINARY 2043AY NOTICE ON THE REVERSE SIDE
PUBLIC AKD PRIN'ATE WORK)
CD m IN ACCORDANCE WITH SECTION 3oor AA11D 3096, t:ALIFORMA CIVIL COOE
k.._
YOU ARE HEREBY NOTTMD THAT....
CONSTRUCTION LENDER or McBride E�octtic, Inc.
- Reputcd Congnm m Leader, ifany 2206 S. Wright St
=- Santa Ana, CA 92705 714-751 38"
(rn.rr rr.d a s*= of pmm a firm m!�)
NONE REPORTED
FOLD HERE
OWNER OR PUBLIC AGENCY
Or Repvecd Owoa (on public Work)
(On Fwate work)
9J� qS(
Caeestruak a ban no_ _ (ifknoan)
ORIGINAL CONTRACTOR or
RTuUd C-m'actor, if say
McBRIDE ELECTRIC, INC.
2206 S. WRIGHT ST.
SANTA ANA, CA 92705
OLD HERE
SUBCONTRACTOR
With vr(Iom daunaw has cowactod
NONE
has fumishod or will famish labor, services equipment or
=tcnais of the following 6aKral dc9mptiom
Electrical services of labor and materiaLs-
Ire&.wow (•.W-�Vr.. rri N—few. rMIVY
kw the buddtag sauctrre or odw work of Improwao l located kflk!'
atIli r L "Aeou
lJ
4-6 C /e) d` ly
Tbc acme of the pa yoa or firm woo aaatracwd for the pardimm
Of web tabor, servwm eiquipramt or matainls:
-1—h &--o �
NOTICE TO PROPERTY OWNER
If bills are not paid ka &9 for the Tabor, serrkes, equipment, or
ma(crisis furshbed. or to be furabbed, a metiaak's its kading to
tie k*s. through court forecbsare preeetdints, of all or part of your
property being so improved mar be ptaeed against the property evco
thongb you Lave paid you eoatrattor ba fi& You many wish to
protect your'aetf against " toasegueace by P1 ro'gahia[ )roar
contractor to fwmbb a segued release by the person or Him &iag
you this notice bcforc making psymeat to your eoatrwetor or (2) aav
other method or derke that is appropriate under the ckcaosstsacei
The pasaa or firm pvW tha nouoe is tegrorod, tmu= w ■ codoadvc bwpvurt
apeanaio pry agomewd bi tp bwe(irs itra as cgxc s uw find (desmbed
w CrA Code ■J l t t)_ mid fad is rdc Gr+a as f000em (m,Ie duzWpirab[e)
ruA
bunk
(ad*—)
cam)
(brines.)
(owe)
(addrest)
Mailed this date: 3i
Administrative Mane er
( 1 (mIc]
An estinute of the total pnce of the tabor, savicw, oquipmrnt or
arterials furnished or to be frrnabW is'
(PLEASE NOTE REVF3LSE SIDEI
Council/Agency Meeting Held:
Deferred/Continued to:
Approved ❑ Conditionally Approved ❑ Denied
>dj ),
WAkci & (ffetj Signature
Council MeeTing Date: ay 15, 2000
Department ID Number: ED 00-23
CITY OF HUNTINGTON BEACH
REQUEST FOR REDEVELOPMENT AGENCY ACTION
SUBMITTED TO: HONORABLE CHAIRMAN AND REDEVELOPMENT AGENCY n"=�
MEMBERS
SUBMITTED BY: RAY SILVER, Executive Director�'�
PREPARED BY: DAVID C. BIGGS, Economic Development Director, r-)
F N �
SUBJECT: Approve the First Implementation Agreement to Amended and
Restated Disposition and Development Agreement with Mayer
_ Financial, LP.
Statement of Issue, Funding Source, Recommended Action, Alternative Action(s), Analysis, Environmental Status, Attachment(s)
CouncillAgency Meeting Held:
Deferred/Continued to:
0 Approved ❑ Conditionally Approved ❑ Denied
City Clerk's Signature
Council Meeting Date: May 15, 2000
Department ID Number: ED 00-23
CITY OF HUNTINGTON BEACH
REQUEST FOR REDEVELOPMENT AGENCY ACTION
SUBMITTED TO: HONORABLE CHAIRMAN AND REDEVELOPMENT AGENCY
MEMBERS
SUBMITTED BY: RAY SILVER, Executive Director
PREPARED BY: DAVID C. BIGGS, Economic Development Director
SUBJECT: Approve the First Implementation Agreement to Amended and
Restated Disposition and Development Agreement with Mayer
Financial, LP.
He:me:n�tofssue, Funding Source, Recommended Action, Alternative Action(s). Analysis, Environmental Status. Attachments)
Statement of Issue: On September 14, 1998, the Redevelopment Agency entered into an
Amended and Restated Disposition and Development Agreement with Mayer Financial, LP,
for the development of the Waterfront Expansion site. During the course of implementing the
DDA, a need has arisen to provide for clarification as to a number of provisions. This is
proposed to be accomplished through a First Implementation Agreement.
Funding Source: NIA
Recommended Action: Approve a First Implementation Agreement between the
Redevelopment Agency and Mayer Financial, LP, and authorize execution by the Agency
Chairperson and Agency Secretary.
Alternative Action(s): Motion to:
1. Approve the First Implemention Agreement with modifications or changes as desired by
the Agency Board; or
2. Do not approve the First Implementation Agreement.
Analysis: During the course of implementing the DDA between the Redevelopment Agency
and Mayer Financial, a number of points have been identified which require clarification.
These include:
E-- /a
REQUEST FOR REDEVELOPMENT AGENCY ACTION
MEETING DATE: May 15, 2000 DEPARTMENT ID NUMBER: ED 00-23
1. Clarifying the termination date for the Interim Shortterm Lease of Parcel C (the Third
Hotel site).
The original intent of the DDA regarding the Interim short-term lease on Parcel C was
that the Interim Lease would terminate if the Developer were in default as to Parcel A.
2. Providing for the sharing of the costs associated with mobile home demolition,
clearance, and removal.
The Redevelopment Agency and Developer will be sharing the $72,000 cost of
demolishing, clearing, and removing the mobile homes. As such, $36,000 will be added
to the amount advanced by the Developer to be repaid from future project revenues.
3. Addressing the use of a HUD Section 108 Loan and Brownfield Economic Development
Initiative Grant, and Community Facilities District bonds, as repayment source for the
Developer Advance.
Timing and conditions for the repayment of a portion of the Developer Advance from the
Section 108 Loan and BED[ grant are clarified, plus the first -call on a portion of the
Agency's public revenues otherwise pledged to repayment of the Developer Advance is
spelled -out. The issuance of CFD bonds is further addressed with the term not to
exceed 25 or 30 years, the use of funds for the bonds conformed to the proposed CFD
documents, and the Total Interest Rate for the Bonds as applied to repayment of the
Developer Advance is clarified to not include any capitalized interest placed into the
reserve fund.
4. Clarifying the conditions under which the "no cross -default " protections apply to Parcel
B (the Residential site) if self -financed.
In the event of a default on Parcel A (Grand Coast Resort site) or Parcel C (Third Hotel
site), the Developer is also considered to be in default with respect to Parcel B (the
Residential site) unless the residential site is under construction and has financing
secured by Parcel B. This language clarifies that the Developer cannot be in cross -
default on Parcel B if they are under construction and it is self -financed.
5. Providing for a two-phase conveyance of the Parcel B (the Residential site).
Given the issues that have arisen associated with the ability of the Developer to fill the
onsite degraded fresh -water wetland, the Implementation Agreement provides for a two-
phase conveyance of the residential portion of the site. It also modifies the timeframes
associated with each of the two-phase conveyances and establishes minimum initial
construction requirements. Given the delays associated with the wetland, the
Developer would have an option to delay commencement of construction of the first
residential units for not more than one year to March 2002, upon a $350,000 property
tax increment in -lieu payment to the Agency.
rcaIMP1515 -2- 51410010:14 AM
REQUEST FOR REDEVELOPMENT AGENCY ACTION
MEETING DATE: May 15, 2000 DEPARTMENT ID NUMBER: ED 00 23
6. Developer shall complete the Shipley Nature Center wetlands mitigation in accordance
with plans first approved in writing by the City, unless City removes said obligation
through the discretionary entitlement process for the Parcel B improvements.
It is anticipated that the Redevelopment Agency will be conveying Parcel A to the Developer
by no later than June 15, 2000. The Developer has already completed substantial site
preparation activity and will resume construction of the project immediately after site
conveyance. Completion of the Grand Coast Resort is expected in the first quarter of 2002.
Environmental Status: The Waterfront Expaision has been evaluated in Supplemental
EIR 82-2 and an Addendum as well as a Federal NEPA document.
Attachment(s):
1. First Implementation Agreement.
Exhibit A — Site Map
Exhibit B — Legal Desciptions of Site by Parcel
RCA Author: D. Biggs, extension 5909
rcaimp1515 -3- 51410010:14 AM
Implementation Agreement
ATTACHMENT #1
FIRST IMPLEMENTATION AGREEMENT
TO AMENDED AND RESTATED
DISPOSITION AND DEVELOPMENT AGREEMENT
MA'S 15 TOW
This FIRST 11APLEMENTATIV-,
AGREEMENT TO AMENDED AND RESTATED
DISPOSITION AND DEVELOPMAGREEMENT (this "First Implementation
Agreement"), dated as of is entered into by and between the
REDEVELOPMENT AGENCY 05 THE CITY OF HUNTINGTON BEACH ("Agency") and
MAYER FINANCIAL, L.P., a California limited partnership ("Developer").
RECITALS
A. Agency and Developer have entered into that certain Amended and Restated
Disposition and Development Agreement dated as of September 14, 1998 (the
"Agreement"). The effective date of the Agreement is September 14, 1998. The
Agreement provides for the phased disposition of the "Site' described therein and the
development and operation by Developer on the Site of certain hotel, residential and
related improvements.
B. The provisions of the Agreement relating to the termination date of the
Interim ShortTerm Lease for Parcel C of the Site require clarification to preserve the intent
of the parties. Agency and Developer intend through this First Implementation Agreement
to provide such clarification.
C. During the course of performance under the Agreement, Agency and
Developer have disagreed as to which party is responsible under the Agreement for the
demolition, clearance and removal from the Site of the approximately one hundred nine
(109) mobilehome coaches that were located on the Site as of September 14, 1998 (the
"Mobilehomes"). Agency has contended that Developer is responsible under the
Agreement for the demolition, clearance and removal of the Mobilehomes, and Developer
has contended that Agency is responsible for such demolition, clearance and removal.
Agency and Developer intend through this First Implementation Agreement to compromise
and resolve this disagreement.
D. The Schedule of Feasibility Gap Payments appended to the Agreement as
Attachment No. 8 describes in general terms certain rights and obligations of the parties
in connection with the Developer's advance and Agency's repayment of certain Eligible
Costs incurred by Developer in redeveloping the Site. Agency and Developer intend
through this First Implementation Agreement to specify in greater detail their respective
rights and obligations in connection with such matters.
(April 26. 2000)
E. The Agreement provides for Developer to develop an approximate range of
150-230 residential units on Parcel B of the Site, depending on the mix of three housing
types — duplexes, cluster homes, and detached patio homes — actually constructed.
Agency and Developer intend through this First Implementation Agreement to clarify that
it was not their intention in the Agreement to require that all three housing types be
developed on Parcel B and that, subject to approval by the City of Huntington Beach
("City") of the development plan for Parcel B, construction of one, two or three of the
housing types referred to in the Agreement would all be in compliance with the Agreement.
F. Agency and Developer intend through this First Implementation Agreement
to clarify the conditions underwhich certain `no cross -default" protections of the Agreement
will attach as to Parcel B where the development of Parcel B is self -financed as opposed
to being financed with a construction deed of trust.
G. The Agreement provides for the Agency to convey to Developer fee title to
all of Parcel B concurrently with the close of escrow for conveyance of the leasehold
interest in Parcel A and for Developer to commence and complete construction of the
residential units proposed for Parcel B in accordance with a schedule set forth therein.
Agency and Developer intend through this First Implementation Agreement to provide for
the conveyance of Parcel B to occur in Mo (2) phases and to adjust the construction
schedule for the residential units to be developed on Parcel B.
COVENANTS
Based upon the foregoing Recitals and for good and valuable consideration, the
receipt of which is hereby acknowledged by troth parties, Agency and Developer agree that
the Agreement shall be amended as follows:
1. It is understood and agreed that nothing in the Agreement, including without
limitation Sections 101(a), Paragraph 1 of Attachment No. 4, and Paragraphs 1(a) and (b)
of Attachment No. 6, was intended or shall be interpreted to require Developer to develop
all three of the alternative housing types —duplexes, cluster homes, and detached patio
homes -- referred to therein. In this regard, it is understood and agreed that the
determination of the housing type or types to be developed on Parcel B shall be as
approved by the City as part of the City's normal development review process.
2. Section 104 of the Agreement, entitled "The Site," is hereby amended to
read in its entirety as follows:
The "Site" is that certain real property illustrated and designated as such on
the "Map of the Site" (which is attached hereto and incorporated herein as
Attachment No. 1) and having the legal description set forth in the"Legal
(April 26.2000)
Description of the Site" (which is attached hereto and incorporated herein as
Attachment No. 2). The Site consists of "Parcel A," "Parcel B" and Parcel C,"
each of which is illustrated and designated as such on the Map of the Site
(Attachment No. 1). Parcel B in turn consists of "Parcel B-1" and "Parcel 13-
2," each of which is illustrated and designated as such on the Map of the
Site. "Parcel," as used in this Agreement, shall mean Parcel A, Parcel B-1,
Parcel B-2 and/or Parcel C, as the context requires. Developer at its sole
cost shall prepare and Agency and the City shall approve the legal
descriptions for the individual Parcels comprising the Site prior to the
conveyance of said Parcels pursuant to this Agreement. At such time as the
final tract map and/or Conveyance Instrument is recorded for any of the
Parcels comprising the Site, the legal descriptions from such tract map
and/or Conveyance Instrument shall govern without the need for an
amendment of this Agreement.
Agency and Developer agree that conveyance of individual Parcels
comprising the Site from Agency to Developer is exempt from compliance
with the Subdivision Map Act and the City's Subdivision Ordinance pursuant
to Government Code Section 66428(a)(2) and applicable law. Accordingly,
Agency shall cooperate in good faith with Developer in permitting the
conveyance of Parcels from Agency to Developer to occur pursuant to this
Agreement without the necessity for approval of a tentative or final
subdivision map, or parcel map; provided, however, that (i) nothing in this
Agreement is intended to relieve Developer of the obligation to obtain a
tentative and final subdivision map for the individual residential lots and
common area lots that Developer proposes to create within Parcels B-1 and
B-2 after conveyance of said Parcel(s) from Agency and (ii) nothing in this
Agreement is intended to relieve Developer of the obligation to obtain a
coastal development permit for the development proposed on any Parcel.
Agency further covenants to cooperate in good faith with Developer, at no
cost to Agency, in seeking and obtaining from the City a certificate or
certificates of compliance pursuant to Government Code Section 66499.35
for any Parcel that is conveyed to Developer without the approval or
recordation of a final subdivision or parcel map as provided herein.
3. Paragraph (c) of Section 104.1 of the Agreement is hereby amended to read
in its entirety as follows:
(c) With respect to that portion of Parcel B-1 which is currently subject to the
Third Amended and Restated Lease, the Third Amended and Restated Lease shall
terminate upon the earlier to occur of (A) the date of which fee title to Parcel B-1 is
conveyed to Developer pursuant to this Agreement; or (B) the Parcel A Conveyance Date.
With respect to that portion of Parcel B-2 which is currently subject to the Third Amended
and Restated Lease, rent shall continue to be paid to the Agency pursuant to the Third
(April 26, 2000)
3
Amended and Restated Lease until its termination as to Parcel B-2. The Third Amended
and Restated Lease shall terminate as to Parcel B-2 upon the date on which fee title to
Parcel B-2 is conveyed to Developer pursuant to this Agreement.
4. Clause (b) in the third sentence of Section 104.1(d) of the Agreement is
hereby amended to read in its entirety as follows:
(b) the Parcel A Conveyance Date (as defined in Section 104.1(b) of this
Agreement) only if the conveyance of Parcel A to Developer has not occurred on
or before the Parcel A Conveyance Date;
5. The second sentence in Section 202 of the Agreement is hereby amended
and a new third sentence is hereby added to Section 202 of the Agreement to read in their
entirety as follows:
At the time provided for conveyance of fee title to Parcel B-1, Agency and
Developer shall execute and Agency shall deliver to Developer and
Developer shall accept the Grant Deed for Parcel B-1 in substantially the
form of the "Parcel B-1 Grant Deed,' which is attached hereto and
incorporated herein as Attachment No. 6A. At the time provided for
conveyance of fee title to Parcel B-2, Agency and Developer shall execute
and Agency shall deliver to Developer and Developer shall accept the Grant
Deed for Parcel B-2 in substantially the form of the "Parcel B-2 Grant Deed,"
which is attached hereto and incorporated herein as Attachment No. 6B.
6. In the title of Section 203.2 of the Agreement and in the first sentence of
Section 203.2(a) of the Agreement, the term "Parcel B" is hereby amended to read "Parcel
B-1." In subparagraph 4 of Section 203.2(a) of the Agreement, the term "Attachment No.
6" is hereby amended to read "Attachment No. 6A." In the last sentence of Section
203.2(b) of the Agreement, the term "Parcel B" is hereby amended to read "Parcels B-1
and B-2."
7. A new Section 203.2.1, entitled "Conditions Precedent to Conveyance of
Parcel B-2," is hereby added to the Agreement to read as follows:
(a) The following obligations of the Developer are conditions precedent to the
Agency's obligation to close escrow and convey Parcel "B-2." Subject to the notice and
cure provisions of Sections 501 through 503, inclusive, of this Agreement and to the
enforced delay provisions of Section 604 of this Agreement, the Agency and its option may
terminate this Agreement as to Parcel B-2 only if any condition and obligation of Developer
set forth below is not satisfied by the Developer or waived in writing by the Agency within
the times required by this Agreement.
(April 26. 2000) 4
1. Agency and Developer shall have closed the escrow for conveyance of
Parcel B-1, or shall close such escrow concurrently with the close of escrow
for conveyance of Parcel B-2.
2. The Developer's representations and warranties set forth in Section 608.1
shall be true and correct as of the date of conveyance.
3. Developer shall not be in material default of any of its obligation ender this
Agreement, the Third Amended and Restated Lease, the Parcel A Lease, or
the Parcel B-1 Grant Deed. The default of a permitted Transferee not owned
or controlled by Developer shall not trigger the lack of satisfaction of this
condition precedent.
4. Developer's execution (as Grantee) and delivery to the Agency of the Grant
Deed in substantially the form appended hereto as Attachment No. 613.
(b) Without limiting the applicability of deadlines specified elsewhere in this
Agreement for the satisfaction of individual conditions precedent specified in this Section
203.2.1, the outside date for satisfaction of all conditions precedent specified in this
Section 203.2.1. is the later of (i) the Parcel A Conveyance Date or (ii) December 1, 2001,
subject to the notice and cure provisions of Section 501 through 503, inclusive, of this
Agreement, notwithstanding and without the benefit of the enforced delay provisions of
Section 604 of this Agreement. Subject to the notice and cure provisions of Sections 501
through 503, inclusive, of this Agreement, if any such conditions are not satisfied as of the
deadline specified in the preceding sentence, the Agency may terminate the provisions of
this Agreement with respect to Parcel B-2 only by giving notice of such termination to
Developer.
B. In the first sentence of Paragraph 10 of Section 203.3 of the Agreement, the
phrase "Parcel B Grant Deed" is hereby amended to read "Parcel B-1 Grant Deed and/or
Parcel B-2 Grant Deed."
9. In the first sentence of Section 205 of the Agreement, the term "Parcel B" is
hereby amended to read "Parcels B-1 and B-2.'
10. In the first sentence of Section 206 of the Agreement, the term "Attachment
No. 6" is hereby amended to read "Attachment Nos. 6A and 6B.'
11. The first sentence in the second paragraph of Section 308 of the Agreement
is hereby amended to read as follows:
(April 26, 2000) 5
As to Parcels B-1 and B-2, following t! a recordation of the Parcel B-1 Grant
Deed and delivery and possession of Parcel B-1 and following the
recordation of the Parcel B-2 Grant Deed and delivery and possession of
Parcel B-2, respectively, and subject to Section 604 of this Agreement,
Developer shall promptly begin and thereafter diligently prosecute to
completion all grading, excavation, site remediation and preparation and
public and private infrastructure necessary for the construction of the
residential improvements to be developed on Parcels B-1 and B-2 pursuant
to this Agreement.
In addition, the first sentence in paragraph 1 of the second paragraph of Section 308
of the Agreement is hereby amended and replaced with the following:
As to the first phase of construction of such residential improvements,
Developer shall commence construction of a first phase comprised of a
minimum of forty (40) dwelling units no later than March 1, 2001, subject to
a delay of not to exceed one (1) year, provided that (i) Developer is not in
default under this Agreement for any period of such delay; and (ii) Developer
provides written notice to Agency of such delay prior to March 1, 2001; and
(iii) Developer pays to Agency prior to March 1, 2001 the amount of Three
Hundred and Fifty Thousand Dollars ($350,000) to compensate Agency for
lost revenues resulting from such delay. Notwithstanding the foregoing, it is
agreed that (i) Developer shall not be required to obtain building permits and
commence construction simultaneously on all 40 dwelling units of the first
phase of dwelling units, it being understood that Developer will commence
construction of model homes first and that Developer's first subphase of
production homes may include fewer than 40 units, and (ii) a default by
Developer by failing to commence the construction of the Parcel A resort
hotel improvements within the times required by this Agreement shall be
deemed to be a default by Developer with respect to the timely
commencement of the Parcel B residential improvements. Nothing in this
Section 308 shall release Developer from the requirement of this Agreement
that no construction of dwelling units shall occur prior to the substantial
commencement of construction of the Parcel A Ocean Grand Resort
improvements as such term is defined in Section 401.1(b) of this Agreement.
Developer shall be deemed to have satisfied the requirement to timely
commence construction of a first phase of dwelling units if Developer
commences creation of the building pads for the dwelling units and the
streets, curbs and gutters to serve such dwelling units prior to such time
requirement and thereafter diligently prosecutes to completion all grading,
excavation, site remediation and public and private infrastructure necessary
for the construction of such dwelling units pursuant to this Agreement.
12. In the third sentence of Section 404 of the Agreement, the phrase'the Parcel
(April 26.2000) 6
B Grant Deed as to Parcel B" is hereby amended to read "the Parcel B-1 Grant Deed as
to Parcel B-1, the Parcel B-2 Grant Deed as to Parcel B-2."
13. In the first line of the first sentence of Section 506(a) of the Agreement, the
term "Parcel B" shall be amended to read "Parcel B-1 and/or Parcel B-2."
14. Clause (c) in the first sentence of Section 507 of the Agreement is hereby
amended to read in its entirety as follows:
(c) A default involving Parcel A or C shall not be deemed to be a default
with respect to either Parcel B-1 or Parcel B-2 if either Parcel B-1 or Parcel B-2
has been conveyed to Developer and either of the following has occurred prior to
the time of such default with respect to Parcel A or C: (i) a construction deed of trust
has been recorded against all or a portion of Parcel B for the first phase of
residential construction or (R) Developer (A) has commenced construction of the first
phase of residential development on Parcel B (which shall be deemed to have
occurred upon the date that Developer commences any physical on -site work after
City's issuance of a final or precise grading plan, excavation permit, or building
permit or permits for such development, and (B) has submitted evidence to the
Agency which is satisfactory to the Agency's Executive Director that sufficient steps
have been taken to self -finance such development and to fund such self-financing.
15. In the first sentence of Section 508(a) of the Agreement, the term "the Parcel
B Grant Deed" is hereby amended to read "either the Parcel B-1 Grant Deed or the Parcel
B-2 Grant Deed."
16. In the third and sixth lines of subparagraph (1) of Section 702(a) of the
Agreement, the term "Parcel B" is hereby amended to read "Parcel B-1." In Section 702(e)
of the Agreement, the term "Parcel B Grant Deed" is hereby amended to read "Parcel B-1
and Parcel B-2 Grant Deeds."
17. The "Map of the Site" (Attachment No. 1) to the Agreement is hereby revised
in accordance with the Map of the Site (Amended) attached to this First Implementation
Agreement.
18. The term "Parcel B" shall be revised to read "Parcel B-1" in the following
paragraphs of the Schedule of Performance (Attachment No. 3) of the Agreement:
Paragraphs 19, 20, and 21 (both columns), and 22 (right column only). In addition, new
paragraphs 22.A, 22.13, and 22.0 are hereby added to the Schedule of Performance
(Attachment No. 3) following paragraph 22 and prior to paragraph 23 to read in their
entirety as follows:
(April 26, 2000) 7
22.A Opening of Escrow (Parcel B-2)
Agency shall open escrow for
conveyance of Parcel B-2.
22.13 Submission/Grant Deed (Parcel 8-
2)
Developer shall execute, acknowledge
and submit to the Escrow Agent the
Grant Deed for Parcel B-2.
22.0 Conveyance. of Parcel B-2: Close
of Escrow. Agency shall execute the
Grant Deed for Parcel B-2, the Grant
Deed shall be recorded, and the escrow
for the conveyance of Parcel B-2 to
Developer shall close.
Within five (5) business days after
Agency's receipt of Developer's request
for opening of escrow, and in no event
later than thirty (30) days prior to the
scheduled closing date for Parcel B-2.
Prior to the scheduled closing date for
Parcel B-2 and in sufficient time for
Agency to review and execute same.
Within thirty (30) days after the opening
of escrow, but only if all conditions
precedent for conveyance of Parcel B-2
have been satisfied or waived by the
benefitted party or parties, which shall
occur no later than the date(s) prescribed
in Section 203.2.1(b); provided, however,
that if Developer has obtained all
necessary entitlements for development
of Parcels B-1 and B-2 from the City and
other governmental agencies at the time
scheduled for Parcel B-1 conveyance,
then Parcel B-2 shall be conveyed to
Developer concurrently with the
convevance of Parcel B-1.
19. Article II of the Scope of Development (Attachment No. 4) is hereby modified
by amending paragraph C and adding thereto a new paragraph E to read in their entirety
as follows:
C. Developer shall complete the Shipley Nature Center wetlands
mitigation in accordance with plans first approved in writing by the
City, unless City removes said obligation through the discretionary
entitlement process for the Parcel B improvements.
E. Developer shall demolish, clear and remove from the Site the
Mobilehomes that were located on the Site as of September
14, 1998. Agency hereby confirms that Agency has
(April 26, 2000) 8
abandoned the Mobilehomes (to which Agency held legal title)
and authorizes Developer to complete the demolition, removal,
and clearance from the Site of the Mobilehomes without need
for any additional notice to Agency or any other opportunity
being provided to Agency to remove the Mobilehomes itself.
20. The Form of Parcel B Grant Deed (Attachment No. 6) is hereby amended as
follows:
A. Attachment No. 6 is hereby changed to Attachment No. 6A and the title is
hereby amended to "Form of Parcel B-1 Grant Deed."
B. The third paragraph of the Form of Parcel B-1 Grant Deed (Attachment No.
6A) is hereby amended to read in its entirety as follows:
This Grant Deed is made pursuant to that certain Amended and Restated
Disposition and Development Agreement by and between Grantor and
Grantee dated September 14, 1996, as amended by that certain First
Implementation Agreement to Amended and Restated Disposition and
Development Agreement dated May 15 , 2000 (collectively, the "DDA"),
which is a public record on file at the offices of Grantor, located at 2000 Main
Street, Huntington Beach, California 92648, and which is incorporated herein
by this reference. The Property is referred to in the DDA as "Parcel B-1."
C. In paragraphs 1(a) and (b) of the Form of Parcel B-1 Grant Deed, the phrase
"one hundred and fifty (150) residences and two hundred and thirty (230) residences" shall
be amended to read "one hundred twenty (120) residences and one hundred fifty (150)
residences."
D. In paragraphs 1(f) and (g) of the Form of Parcel B-1 Grant Deed, the term
"Property" shall be revised to read "Property (and that certain adjacent real property
described in the DDA as Parcel B-2)."
21. A new Attachment No. 613, entitled "Form of Parcel B-2 Grant Deed," is
hereby added to the Agreement to read identically to Attachment No. 6A (as revised
pursuant to this First Implementation Agreement) with the following exceptions:
A. The second sentence in the third paragraph of the Form of Parcel B-2 Grant
Deed shall read as follows:
The Property is referred to in the DDA as "Parcel B-2."
B. In paragraphs 1(a) and (b) of the Form of Parcel B-2 Grant Deed, the phrase
"one hundred and twenty (120) residences and one hundred and fifty (150) residences"
(April 26, 2000) 9
shall be amended to read "twenty-five (25) residences and forty-five (45) residences."
C. In subparagraphs 1(0 and (g) of the Form of Parcel B-2 Grant Deed
(Attachment No,. 6B), the term "Property" shall be amended to read the "Property (and that
certain adjacent real property described in the DDA as Parcel B-1)."
22. Paragraph (a)(2) of the Schedule of Feasibility Gap Payments (Attachment
No. 8) is hereby modified by adding thereto a paragraph (E), which reads in its entirety as
follows:
(E) the sum of Thirty -Six Thousand Dollars ($36,000),
which sum the parties agree equals fifty percent (50%) of the actual and
reasonable cost incurred by Developer for the demolition, clearance and
removal from the Site of the Mobilehomes.
23. Paragraph (c)(iv) of the Schedule of Feasibility Gap Payments (Attachment
No. 8) is hereby modified and renumbered as paragraph (c)(v), and a new paragraph
(c)(iv) of the Schedule of Feasibility Gap Payments is hereby added, to read in their
entirety as follows:
(iv) Solely for purposes of calculating the amount of interest payable
hereunder, Developer shall be deemed to have paid all costs of demolition,
clearance and removal from the Site of the Mobilehomes pursuant to
paragraph (a)(2)(E) of this Attachment No. 8 as of May 1, 1999.
(v) Solely for purposes of calculating the amount of interest payable
hereunder, Developer shall be deemed to have paid all Eligible Costs
(exclusive of the amounts deemed paid pursuant to (i), (ii), (iii) and (iv)
above) as of the later to occur of (A) three hundred and sixty (360) days after
the Effective Date of the Parcel A Lease or (B) the date on which Developer
submits a Certified Cost Statement to the Agency; provided, however, that
if Developer is not at all times in full compliance with the Schedule of
Performance date for completion of construction of the resort hotel on Parcel
A, the amount of Eligible Costs deemed to have been paid by Developer as
of such date shall be reduced by ten percent (10%) per annum applied on
a pro rata basis for the period of time Developer is not in compliance with the
Schedule of Performance dates for commencement and completion of
construction.
24. Paragraph (d) of the Schedule of Feasibility Gap Payments (Attachment No.
8) is hereby modified to read in its entirety as follows:
(d) The obligations of the Agency under this Attachment No. 8
shall be special and limited obligations payable to Developer solely from the
(Ap H126. 2000) 10
sources of funds expressly identified in this Attachment No. 8; provided,
however, that if and to the extent Agency is in breach of its obligations to
make payments from the funds specified herein, then such Agency
obligations shall to such extent be payable from any source of Agency funds
lawfully available for such purpose. Subject to the provisions of the
immediately preceding sentence, the Agency shall have no obligation to pay
any amounts to Developer pursuant to this Attachment No. 8 except as
follows:
(i) The following conditions precedent to each payment
hereunder shall be satisfied:
(A) Subject to the provisions of paragraph (e) below,
the Completion Date, as defined in paragraph 0) below, shall have occurred;
and
(B) Developer shall not have failed to cure any default
within the applicable Cure Period as to any of its obligations relating to
Parcel A under this Agreement and the Parcel A Lease.
(C) If Community Facilities District bonds or similar
instruments have been issued pursuant to paragraph (f) of this Attachment
No. 8, Developer shall have paid all special taxes (and any related penalties,
costs, fees or other charges) due in connection with such bonds or similar
instruments and shall be in full compliance with all of its other obligations in
connection with such bonds or similar instruments.
(ii) On or prior to September 30 of each year, beginning with
the first September 30 which follows the Completion Date, and continuing
until the first to occur of (A) the September 30 which follows the twentieth
(201") anniversary of the Completion Date, or (B) the date on which the
amount specified in paragraphs (a) and (c) above (less any amount(s) paid
pursuant to paragraph (b) above) has been paid in full, the Agency shall pay
to Developer, in repayment of all amounts owed Developer pursuant to
paragraphs (a) and (c) of this Attachment No. 8 (less amounts paid to
Developer pursuant to paragraph (b) of this Attachment No. 8) an amount
equal to the lesser of (i) one hundred percent (100%) of Available Site -
Generated Property Tax Increment, as defined in paragraph 0) below,
received by the Agency during the prior Agency fiscal year (July '1-June 30),
or (ii) such portion of such Available Site -Generated Property Tax Increment
received by the Agency during the prior Agency fiscal year that is sufficient,
when added to the Available Site -Generated Transient Occupancy Tax to be
paid to Developer for such fiscal year by Agency pursuant to this Attachment
No. 8, to repay all funds owed by Agency to Developer pursuant to this
(April 26, 2000) 11
Attachment No. 8, plus interest, within a twenty (20) year amortization period
commencing with the first September 30 which follows the Completion Date.
Agency hereby covenants to take all actions required by law to receive the
Available Site -Generated Property Tax Increment, including but not limited
to the timely filing of statements of indebtedness pursuant to California
Health and Safety Code Section 33675.
(iii) On or prior to September 30 of each year, beginning with
the first September 30 which follows the Completion Date, and continuing
until the first to occur of (A) the September 30 which follows the twentieth
(20'h) anniversary of the Completion Date, or (B) the date on which the
amount specified in paragraphs (a) and (c) above (less any amount(s) paid
pursuant to paragraph (b) above) have been paid in full, the Agency shall
pay to Developer, in repayment of all amounts owed Developer pursuant to
paragraphs (a) and (c) of this Attachment No. 8 (less amounts paid to
Developer pursuant to paragraph (b) of this Attachment No. 8), an amount
equal to the lesser of (i) one hundred percent (100%) of the Available Site -
Generated Transient Occupancy Tax, as defined in paragraph 6) below,
received by Agency during the prior Agency fiscal year (July 1-June 30) or
(ii) such portion of such Available Site -Generated Transient Occupancy Tax
that is sufficient, when added to the Available Site -Generated Property Tax
Increment to be paid to Developer for such fiscal year by Agency pursuant
to this Attachment No. 8, to repay all funds owed by Agency to Developer
pursuant to this Attachment No. 8, plus interest, within a twenty (20) year
amortization period commencing with the first September 30 which follows
the Completion Date. Agency hereby covenants to refrain from taking any
action which would diminish or impair in any way its receipt of Available Site -
Generated Transient Occupancy Tax.
(iv) The annual sum of Available Site -Generated Property
Tax Increment and Available Site -Generated Transient Occupancy Tax "that
is sufficient to repay all funds owed by Agency to Developer pursuant to this
Attachment No. 8, plus interest, within a twenty (20) year amortization period
commencing with the first September 30 which follows the Completion Date,'
as provided for in subparagraphs (ii) and (iii) of this paragraph (d), shall be
recalculated prior to each September 30 during the 20-year amortization
period to account for all of the following: (A) prepayments of Agency's
obligations pursuant to paragraph (e) of this Attachment No. 8; (B) any
annual payment by Agency less than the amount sufficient to fully amortize
the payments due to Developer over a 20-year amortization period based
upon the amortization schedule then in effect; and (C) any adjustments in the
Developer's Cost of Funds after the date that the amortization schedule then
in effect was prepared. Consider the following examples:
(April 26, 2000) 12
Example 1: Assume that, pursuant to paragraph (e) of
this Attachment No. 8, Agency prepays $8 million to Developer
prior to the Completion Date. In such event, said $8 million
prepayment shall be applied first to reduce accrued and unpaid
interest then owing to Developer, the balance of said $8 million
shall next be applied to reduce outstanding principal owing to
Developer for Eligible Costs, and the 20-year amortization
schedule (and the first annual maximum Agency payment due
to Developer on the September 30 first following the
Completion Date) shall be calculated based upon the
remaining principal balance owing to Developer, plus accrued
interest on said amount from the date of Agency's $8 million
prepayment through the first September 30 following the
Completion Date, and using the then -applicable Developer's
Cost of Funds.
Example 2: Assume the same facts set forth in
Example 1. Assume further that the sum of the Available Site -
Generated Property Tax Increment and Available Site -
Generated Transient Occupancy Tax available for payment by
Agency to Developer on the first September 30 following the
Completion Date is less than the amount needed to fully repay
all funds owed by Agency to Developer pursuant to this
Attachment No. 8, plus interest, within a 20-year amortization
schedule (assuming that the subsequent 19 annual payments
were the same). In such event, Agency shall pay to Developer
on said September 30 the sum of the Available Site -Generated
Property Tax Increment and Available Site -Generated
Transient Occupancy Tax received by Agency during the prior
Agency fiscal year, the difference between the actual Agency
payment and the amount of the payment that would have been
needed to fully repay all funds owed by Agency to Developer
within a 20-year amortization schedule shall be taken into
account in order that a revised amortization schedule can be
prepared, and the amortization schedule for the remaining 19
years shall be adjusted accordingly.
Example 3: Assume the same facts set forth in
Example 1. Assume further that the sum of the Available Site -
Generated Property Tax Increment and Available Site -
Generated Transient Occupancy Tax available for payment for
Agency to Developer on the first September 30 following the
Completion Date is more than the amount needed to fully
repay all funds owed by Agency to Developer pursuant to this
(April 26. 2DDO) 13
Attachment No. 8, plus interest, within a 20-year amortization
schedule (assuming that the subsequent 19 annual payments
were the same). Assume further that Agency elects pursuant
to paragraph (e) of this Attachment No. 8 to prepay Developer
the "excess" portion of the Available Site -Generated Transient
Occupancy Tax generated during the prior fiscal year. In such
event, the amount of prepayment shall be deducted from the
sum of the total outstanding principal and accrued interest then
owing by Agency to Developer hereunder and the amortization
schedule for the remaining 19 years shall be adjusted
accordingly.
Examples 1, 2 and 3 are set forth herein for illustrative purposes only,
and in the event of any conflict between the provisions of said Examples and
the text of this Agreement, the text of this Agreement shall prevail.
25. Paragraph (e) of the Schedule of Feasibility Gap Payments is hereby
modified to read in its entirety as follows:
(e) The Agency's obligations hereunder may be prepaid by the
Agency, in whole or in part, at any time and from time to time without penalty,
from any source of funds, including, without limitation, (i) monies advanced
by HUD to the City under HUD's Section 108 loan program and thereupon
advanced by the City to the Agency and/or (ii) grants obtained through
HUD's Brownfelds Economic Development Initiative Grant program. City is
in the process of attempting to secure such Section 108 loan in the amount
of Six Million Dollars ($6,000,000) and such Brownfelds grant in the amount
of Two Million Dollars ($2,000,000). In the event that City is successful in
securing all or a portion of said loan and/or grant funds, Agency agrees to
cause said funds to be transferred to Agency and to utilize said funds to pay
a portion of Agency's obligations to Developer, with said funds to be paid to
Developer on or before the latest of the following dates: (i) within thirty (30)
days of receipt of such funds by City or Agency from HUD (whichever entity
receives the funds) (ii) the date Developer and Agency closed escrow to
Parcel A pursuant to this Agreement, (ii)i the recordation of the construction
loan approved by the Agency as part of the evidence of financing required
hereunder and the funding thereof so as to make all necessary funds
available for the development of Parcel A, and (iv) the commencement of
construction of the Parcel A improvements following such construction loan
recordation and funding. Such commencement of construction shall be
deemed to have occurred upon (a) receipt by the Agency of a true and
correct copy of (1) a binding construction contract for all remaining Parcel A
improvements and (II) a binding notice to proceed from Developer to such
contractor covering all such improvements, and (b) the commencement of
(April 26, 2000) 14
work on Parcel A in accordance therewith, such as the commencement of
the removal or moving of the dirt currently stored on Parcel A.
26. Paragraph (f) of the Schedule of Feasibility Gap Payments is hereby modified
to read in its entirety as follows:
(f) (1) Agency and Developer shall use their reasonable best
efforts to cause City to approve the issuance of Community Facilities District
bonds or sim'lar instruments (the "Bonds") in accordance with this paragraph
(f) for the purpose of generating net proceeds to finance Eligible Costs, upon
the satisfaction of each and all of the following conditions precedent to the
approval of such an issuance:
(A) Agency's and City's determination that such an
issuance is feasible from a legal and marketing standpoint and would not
materially adversely affect the financial objectives of the Agency or the City;
(B) Agency's determination that the fair market value
of the Site (assuming that all public improvements are in place) is not less
than 300% of the original gross principal amount of the Bonds; and
(C) The close of escrow to Parcel A pursuant to this
Agreement and Developer's substantial commencement and diligent
prosecution of construction on Parcel A in accordance with this Agreement
and the Parcel A Lease. For purposes of this requirement, "substantial
commencement" shall mean the pouring of not less than fifty percent (50%)
of the foundations and pile caps for the main Ocean Grand Resort (Parcel
A) structure.
(2) The Bonds shall be amortized over a term of not less
than twenty-five (25) and not more than thirty (30) years, as determined by
Agency or City to be optimal in consultation with its or their financial advisor,
underwriter, and Developer.
(3) The Bonds sha!I be secured solely by the pledge of the
levy of a special tax on Lessee's leasehold interest in Parcel A and the
improvements to be constructed thereon pursuant to this Agreement.
Developer shall be solely responsible for payment of the special tax.
Developer hereby covenants and agrees to pay the special tax when due,
and Developer's failure to pay the special tax when due shall constitute a
default relating to Parcel A under this Agreement.
(4) Notwithstanding any provision of this Agreement to the
contrary, the Agency shall have no obligation to reimburse Developer for
(April 26, 2000) 15
debt service, repayment of principal or interest, penalties or any other
amounts due in connection with the Bonds, including but not limited to any
amounts which may become payable as a result of Developer's failure to
timely pay special taxes and/or to timely perform Developer's other
obligations in connection with the Bonds.
(5) The Agency's payments and obligations under this
Attachment No. 8 shall not be pledged to payment of the Bonds, and the
Agency shall have no obligation to the bondholders or any other third party
(other than a permitted Transferee or Mortgagee of Developer under this
Agreement and/or the Parcel A Lease).
(A.phl 26, 2000) 16
(6) Subject to all of the terms and conditions of this
Agreement, the public improvements and site preparation activities for which
Developer may receive reimbursement from proceeds of the Bonds, and the
approximate amount of each such reimbursement, are as follows:
(A) purchase of Mobilehomes for removal from the
Site, in the amount of $974,756.00;
(B) demolition of Mobilehomes, in the amount of
$36,000;
(C) demolition of the clubhouse and pads within the
public right of way, in the amount of $282,544;
(D) demolition of the Huntington Beach Inn, in the
amount of $54,927;
(E) construction of Pacific View Avenue, Twin Dolphin
Drive, Sunrise Drive, and improvements associated therewith, in the
approximate amount of $4,386,059;
(F) remediation and relocation of wetlands, in the
approximate amount of $600,000;
(G) dedication of land (under Pacific View Avenue
and Twin Dolphin Drive) to the City of Huntington Beach, in the approximate
amount of $4,142,500; and
(H) construction of the pedestrian overpass of Pacific
Coast Highway connecting Parcel A to the City beach, in the approximate
amount of $1,900,000;
(1) relocation of the City's Beach Maintenance
Facility, in an amount not to exceed $750,000;
(J) any other public improvements and site
preparation activities that City/Agency and Developer may mutually agree
are eligible for funding through the Bonds, in the amount reasonably
approved by the City therefor; and
(K) accrued interest on any of the foregoing items
calculated in accordance with paragraph (c) of this Attachment No. 8.
(7) The Bond documents shall provide that Developer shall
(Aph[ 26, 2000) 17
receive reimbursement from Bond proceeds for costs actually and
reasonably incurred by Developer after October 31, 1998, in connection with
a reimbursable item specified in clause (A), (B), (C), (D), (E), (F), (G), (H), or
(1) above, and accrued interest as provided in clause (J) above, not to
exceed the maximum dollar amounts specified above for each such item for
which a maximum dollar amount is specified, only after satisfaction of all
conditions precedent applicable to such reimbursement as may be set forth
in the Bond documents, and consistent with any applicable conditions of
approval imposed by the City in connection with approving entitlements for
the development of Parcel A of the Site as may be relevant to each eligible
item of reimbursement, and provided that Developer shall be in full
compliance with all of its obligations under this Agreement, including without
limitation the obligations specified in this Attachment No. 8.
(8) A portion of the proceeds of the Bonds shall be paid to
the City and/or the Agency to cover costs of issuance, as reasonably
determined by the City and/or the Agency. The costs of issuance shall
include, without limitation, the cost of appraisals conducted prior to, on or
after the date of issuance.
27. For purposes of determining the amount of "Available Site -Generated
Property Tax Increment" attributable solely to Parcel A, as that term is defined in paragraph
0)(2) of the Schedule of Feasibility Gap Payments, the base year valuation attributable to
Parcel A pursuant to Section 33670(a) of the California Health & Safety Code shall be
deemed to be Nine Hundred and Seventy -Eight Thousand Four Hundred and Sixteen
Dollars and Sixty -Four Cents ($978,416.64).
28. Paragraph 0)(1) of the Schedule of Feasibility Gap Payments (Attachment
No. 8) is hereby amended to read in its entirety as follows:
(1) "Agreement" as used herein shall mean that certain Amended and
Restated Disposition and Development Agreement by and between
Agency and Developer dated as of September 14,1998, as amended
by that certain First Implementation Agreement to Amended and
Restated Disposition and Development Agreement dated as of May
15, 2000, of which this Attachment No. 8 is a part.
29. Paragraph 0)(3) of the Schedule of Feasibility Gap Payments (Attachment
No. 8) is hereby modified to read in its entirety as follows:
(3) "Available Site -Generated Transient Occupancy Tax" as
used herein shall mean the sum of (i) five -sixths (5/6ths) of the transient
occupancy tax revenue actually paid to and received by the Agency pursuant
to Ordinance No. 2974 of the City of Huntington Beach and Ordinance No.
(April 26. 2000)
18
I of the Agency in any fiscal year following the Completion Date of the hotel
to be constructed on Parcel A by Developer pursuant to and in accordance
with the Agreement, less, in the event the Agency uses monies advanced by
the City from the HUD Section 108 Loan referred to in paragraph (b) of this
Attachment N3. 8 to make a prepayment to Developer pursuant to paragraph
(e) of this Attachment No. 8, (ii) an amount equal to the annual principal and
interest payment required to be made by City or Agency to HUD to repay
the HUD Section 108 Loan (utilizing a 20-year payment schedule) and the
applicable interest rate City is required to pay pursuant to the Section 108
Loan, and less (iii) amounts needed to reimburse the City or Agency for said
HUD Section 108 loan repayments made utilizing funds other than transient
occupancy tax revenue received by the Agency pursuant to said Ordinances
Nos. 2974 and 1.
30. Paragraph 6)(7) of the Schedule of Feasibility Gap Payments (Attachment
No. 8) is hereby modified by adding a clause (C) thereto to read as follows:
"...; or (C) commencing upon the date of issuance of the Community Facilities
District Bonds referred to in paragraph (f) of this Attachment No. 8, the total interest rate
payable in connection with the repayment of such CFD Bonds (up to the amount of the net
proceeds of the CFD Bonds so paid to Developer)." 'Total Interest Rate' as used herein
means the total present value of all interest payments throughout the life of the bonds,
divided by the gross bond proceeds less any capitalized interest and any amount placed
in a reserve fund.
31. Recital A of the Form of Memorandum of Lease and Right of First Refusal
(Attachment No. 10) is hereby amended to read in its entirety as follows:
A. Agency and Lessee have entered into that certain Amended
and Restated Disposition and Development Agreement dated
as of September 14, 1998, as amended by that certain First
Implementation Agreement to Amended and Restated
Disposition and Development Agreement dated as of May 15,
2000 (collectively, the "Agreement").
32. In the third line of the second paragraph of the Form of Release of
Construction Covenants (Attachment No.11), the following phrase shall be added after the
date September 14, 1998: "as amended by that certain First Implementation Agreement
to Amended and Restated Disposition and Development Agreement dated as of May L,
2000,".
33. All references in the Agreement to Mayer Financial, LTD., shall be deemed
to refer to Mayer Financial, L.P. Developer hereby warrants and represents that there has
been no change in the name, entity status, or ownership of Developer since the date that
(Apol 26. 2000) 19
the Agreement originally was executed, and that the reference in the Agreement to Mayer
Financial, LTD., was a mistake.
34. Except as expressly set forth herein, each and every term set forth in the
Agreement shall remain in full force and effect.
REDEVELOPMENT AGENCY OF THE CITY OF
HUNTINGTON BEACH (Agency)
Date: 5— 2.z.- n By: )(—
Chairman
ATTEST:
Agency Secretary
REVIEWED AND APPROVED
AS TO FORM:
Agency General Counsel
By:
APPROVED AS TO FORM:
KANE, BALLMER & BERKMAN
Agency Special Counsel
By:lfz 'C3,1C
(Signatures continued on following page]
(April 26, 2oao) 20
MAYER FINANCIAL, L.P., a California limited
partnership
By: RLM Management, Inc., a California corporation,
its General Partner
Date: Ad By:
Robert L. MayerfJ
President and
Chief Executive Officer
Date: ."Id-91M By:
Robert r, r.
Secreta
(April 26, 2000) 21
ATTACHMENT NO. 1
MAP OF THE SITE
1
N35'22'25" E (R)
N8
�1 9'4
o/6 \ \
� /vim/ "tii rHF
E'LY LINE SEC 14,
T. 6 S., R. 11 W..
M.M. 51/14
N'LY LINE S 1/2. NE: 1/4
SEC 14. 'T.6.S.. R.11.V,1.,
M.M. 51/14
P.O.B.
1658.70' f
A=05'54'16' R=2452.00' L=252.68'
N48'43'21"W 38.E='
THE SITE
a. W, 45.56 AC.
,A 00. ;p'?'
� M
�; \ co
.—
C' co
o
N
N00'44'22"W 12.63' '`
b N53'05'49"W 172.33'
0
n
1
fr
J
0
m
U
6
0o
S74'34' 12" W 45.01'
ATTACHMENT NO.2
LEGAL DESCRIPTION OF THE SITE
ALL THAT CERTAIN LAND IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE. STATE OF CALIFORNIA,
DESCRIBED AS FOLLOWS:
THAT PORTION OF SECTION 14, TOWNSHIP 6 SOUTH, RANGE 11 WEST, IN THE RANCHO LOS BOLSAS, AS PER
MAP FILED IN BOOK 51, PAGE 14 OF MISCELLANEOUS MAPS IN THE OFFICE OF THE COUNTY RECORDER OF
SAID COUNTY, DESCRIBED AS FOLLOWS:
BEGINNING AT THE INTERSECTION OF A LINE THAT IS PARALLEL WITH AND 50.00 FEET WEST OF THE EAST
LINE OF SAID SECTION 14, WITH THE NORTH LINE OF THE SOUTH HALF OF THE NORTHEAST QUARTER OF
SAID SECTION; THENCE SOUTH 00° 44' 22' EAST 1820.36 FEET ALONG SAID PARALLEL LINE TO THE NORTH
LINE OF THE LAND DESCRIBED IN BOOK 2351, PAGE 5 OF OFFICIAL RECORDS OF SAID COUNTY; THENCE
SOUTH 741134' 12* WEST 45.01 FEET ALONG SAID NORTH LINE TO THE NORTHEAST LINE OF THE LAND
DESCRIBED AS PARCEL 2 IN BOOK 826, PAGE 379, SAID OFFICIAL RECORDS; THENCE NORTH 531, 05'49'WEST
172.33 FEET ALONG SAID NORTHEAST LINE TO THE WEST LINE OF THE LAND DESCRIBED IN BOOK 261, PAGE
41 OF DEEDS, RECORDS OF SAID COUNTY, THENCE NORTH 000 44' 22' WEST 12.63 FEET ALONG SAID WEST
INE TO THE NORTHEASTERLY RIGHT OF WAY LINE OF PACIFIC COAST HIGHWAYAS DESCRIBED IN BOOK
;, PAGE 400 OF SAID OFFICIAL RECORDS; THENCE NORTH 530 05' 49' WEST 1966.76 FEET ALONG SAID
.jRTHEAST LINE TO THE EASTERLY LINE OF LOT 1, TRACT NO. 13045 AS SHOWN ON INSTRUMENT NO. 89-
145536, BOOK 628, PAGES 46 AND 47 OF MISCELLANEOUS MAPS, RECORDS OF SAID COUNTY; THENCE
NORTH 360 54' 20' EAST 360.46 FEET ALONG SAID EASTERLY LINE TO THE NORTH LINE OF SAID LOT 1;
THENCE SOUTH 480 43' 21' EAST 25.00 FEET; THENCE NORTH 41016' 39' EAST 97.00 FEET; THENCE N 480 43'
21' WEST 38.85 FEET TO THE BEGINNING OF A 2452.00 FOOT RADIUS CURVE THAT IS CONCAVE
SOUTHWESTERLY; THENCE NORTHWESTERLY 252.68 FEET ALONG SAID CURVE THROUGH A CENTRAL
ANGLE OF 05° 54' 126' TO A POINT ON THE NORTH LINE OF THE SOUTH HALF OF THE NORTHEAST QUARTER
OF SAID SECTION 14, A LINE RADIAL TO SAID POINT BEARS NORTH 35° 22' 25' EAST; THENCE NORTH 89° 4T
58' EAST 1658.70 FEET ALONG SAID NORTH LINE TO THE POINT OF BEGINNING.
ALL AS SHOWN ON ATTACHMENT NO. 1 ATTACHED HERETO AND MADE A PART HEREOF.
PARCEL B-1
MAP OF THE SITE
Poe ._ BEACH BLVD �N` w ° .. CONSTRUCTION r�
S 00.17'01' W EAST LINE �E SEC 1a.-6-11
472.03• _ _
T.P.O.B. -+
r�
LINE DATA NOT A PART ,
I"
N0.
DIRECTION
DISTANCE
L 1
N 89*42*50" W
85.15'
L2
N 52'54'04" W
170.18'
1.3
N 5644'15" W
1126.00'
L4
N 51.02'09' v/
122.87'
L5
N 56-06'20" W
45.02•
L6
N 11.30'02' W
20.77'
L7
N 37'56'06" E
15.58'
L8
N 52'03'54' W
34.00'
L9
IS 3756'Or W
16.76'
L 10
1 N 52'03'54" W
TOO'
L 11
N 52-03.54' W
9.00'
L 12
N 37'56'06- E
7.28'
03
N 52'03 ;54' rr
34.00'
L 14
S 3756'06" W
14.96'
L 15
S 8753'34' W
16. 4 7'
L 16
N 42' 18' 11" E
7.52'
07
IN 4741'18" yr
38.85'
L 18
IN 89' 15'39- W
50.00'
N'LY LINE
S112 NET/4
SEC 14-6-1 1
s
�"flJ
0
1
L8 L7
L12 Lo
L13 1
L14
L 15 /r
o-
ra
LOT 2
LOT 1 �.
ni11►1,3 5 2-5/ �� 6 - �17
/ LOT I
h,'A,43 790/44-10
R.O.W. DEDICATED PER DOC.
RECORDED SEPT. 1. 1995
AS INST. NO. 95-0384748 O.R.
C[IRVF DATA
NUMBER
DELTA
RADIUS
LENGTH
Cl
64'44'44'
100.00'
113.00'
C2
04'02'03"
1065.00'
74.99'
C3
03'50' 11'
1135.00'
76.00'
C4
05'42'06'
1065.00'
105.98'
C5
05'33' 16'
1135.00'
110.03'
C6
02'48'13"
1060.00'
51.87'
C7
05'54' 17'
2452.00'
252. 70'
/G 50' 1d0' 200• 400'
/4 l/
Q / GRAPHIC SCALE
PARCEL B-1
LEGAL DESCRIPTION
Page 9 of 2 Pages
THE LAND DESCRIBED HEREIN IS SITUATED IN THE CITY OF HUNTIYMN BEACH, COUNTY OF
ORANGE, STATE OF CAUFORNIA, BEING A PORTION OF SECTION 14. TOWNSHIP 6 SOUTH.
RANGE 11 WEST OF THE RANCHO LAS BOL.SA.S, AS PER MAA RECORDED IN BOOK 51. PAGE 14
OF ii1SCELLANE0U5 !NAPS. RECORDS OF THE COUNTY OF ORANGE. MORE PARTICULARLY
DESCRIBED AS FOLLOWS:
A PORTION OF THAT LAND SHOWN AS THE DESIGNATED REMAINDER ON MAP THEREOF OF TRACT
NO. 15535 RECORDED SEPTEMBER 14. 1999 IN BOCK 790. PAGES 44 THROUGH 50,
INCLUSIVE. OF MAPS. RECORDS OF THE COUNTY OF ORANGE MORE PARTICULARLY DESCRIBED
AS FOLLOWS:
BEGINNING AT THE NORTHEAST CORNER OF THE SOUTH ONE-HALF OF THE NORTHEAST ONE-
OUARTER OF SAID SECTION 74. PER SAID TRACT NO. 15535: THENCE ALONG THE NORTHERLY
LINE OF SAID SOUTH ONE --HALF NORTH 89'15'39" WEST 50.00 FEET TO THE WESTERLY RIGHT OF
WAY OF BEACH BOULEVARD AS SHOWN ON SAID TRACT NO. 15535, SAID POINT BEING THE TRUE
POINT OF BEGINNING, THENCE ALONG SAID WESTERLY RIGHT OF WAY SOUTH 00'17'01' WEST
472.08 FEET. THENCE. LEAVING SAID RIGHT OF WAY, NORTH 89*42*500 VIEST 85.15 FEET TO THE
BEGINNING OF A TANGENT CURVE CONCAVE SOUTHEASTERLY. HAVING A RADIUS OF 700.00
FEET: THENCE ALONG S0.'D CURVE 113.00 FEET THROUGH A CENTRAL ANGLE OF 6444'44";
THENCE TANGENT TO SAID CURVE SOUTH 15'3226" WEST 444.93 FEET To A POINT ON THE
NORTHEASTERLY RIGHT OF K AY OF PACIFIC VIEW AVENUE. 80 FEET YrIOE. AS DEDICATED ON
SAID TRACT NO. 15535. SAID POINT BEING ON A CURVE CONCAVE NORTHEASTERLY, HAVING
A RADIUS OF 1065.00 FEET. A LINE RADIAL TO SAID POINT BEARS SOUTH 33'03753"
VIEST; THENCE ALONG SAID CURVE AND SAID RIGHT OF WAY 74.99 FEET THROUGH A CENTRAL
ANGLE OF 04'02'03`; THENCE CONTINUING ALONG SAID NORTHEASTERLY RIGHT OF WAY
THROUGH THE FOLLOWING COURSES. THENCE TANGENT TO SAID CURVE NORTH 52'54'04" WEST
170;18 FEET TO THE BEGINNING OF A TANGENT CUr71E; CONCAVE SOUTHWESTERLY. HAVING A
RADIUS OF 1135.00 FEET. THENCE ALONG SAID CUr71E 76.00 FEET THROUGH A CENTRAL
ANGLE OF 03'S0'11`; THENCE TANGENT TO _W0 CURVE NORTH 5644'15' WEST 726.00
FEET TO THE BEGINNING OF A TANGENT CURVE: CONCAVE NORTHEASTERLY. HAWNG A RADIUS
OF 1065.00 FEET; THENCE ALONG WD CURVE 105.98 FEET THROUGH A CENTRAL ANGLE OF
05'42'06"; THENCE TANGENT TO SAO CURVE NORTH 51'02'09' WEST 122.87 FEET TO THE
BEGINNING OF A TANGENT CURVE. CONCAVE SOUTHW_r RLY, HAVING A RADIUS OF 1135.00
FEET. THENCE ALONG SAID CURVE 110.03 FEET THROUGH A CENTRAL ANGLE OF 05'331r.
THENCE TANGENT TO SAID CURVE NORTH 56'05 20" WEST 43.02 FEET; THENCE NORTH
11'30'02' WEST 20.77 FEET. THENCE NORTH 37'56O6" EAST 15.58 FEET; THENCE NORTH
52 03'54' WEST 34.00 FEET; THENCE SOUTH 3756'Or WEST 16.76 FEET; THENCE NORTH
5T03'54' WEST 18.00 FEET. THENCE NORTH 37-56'06" EAST 7.28 FEET. THENCE NORTH
5703'54" VIEST 34.00 FEET: THENCE SOUTH 3756'06" WEST 14.96 FEET. THENCE SOUTH
62'53 34' WEST 16.47 FEET; THENCE NORTH 56'06 20" WEST 315.97 FEET To THE
BEGINNING OF A TANGENT CURVE. CONCAVE NORTHStSTERLY, HAYING A RADIUS OF 1060.00
FEET, THENCE ALONG SAID CURVE 51.87 FEET THROUGH A CENTRAL ANGLE OF 0748'13" TO
A POINT ON THE GENERAL NORTHEASTERLY RIGHT Or WAY OF PACIFIC VIEW AVENUE,
DEDICATED PER DOCUMENT RECORDED SEPTEMBER 1. 1995, AS INSTRUMENT NUMBER 95-
0384748, RECORDS OF THE COUNTY OF ORANGE. A LINE RADIAL TO SAID POINT BEARS
SOUTH 3541'5j- WEST; THENCE LEAAWNG _WD NORTHF4STERLY RIGHT OF WAY PER SAID
TRACT NO. 15535 AND CONTINUING ALONG SAID GENERAL NORTHEASTERLY RIGHT OF WAY PER
SAID DOCUMENT. THROUGH THE FOLLOWING COURSES; THENCE NORTH 42' 18' 11' FAST 7.52
FCL'T. THENCE NORTH 4741'18' WEST .38.85 FEET TO THE BEGINNING OF A TANGENT
PARCEL Q-1
LEGAL DESCRIPTION
Page 2 of 2 Pages
CURVE, CONCAVE SOUTHWESTERLY, HAVING A RADIUS OF 245ZOO FECT; THENCE ALONG SAID
CURVE 2SZ70 FEET THROUGH A CENTRAL ANGLE OF 05-54-17' TO SAIO NORTH LINE OF THE
SOUTH ONE --HALF OF THE NORTHEAST ONE -QUARTER OF = SECTION 14; THENCE LEAWNC
SAID GENERAL NORTHEASTERLY RIGHT OF WAY. ALONG SAID NORTH LINE SOUTH B9.15 39`
EAST 1655.76 FEET TO THE TRUE POINT OF $EGINNING.
CONTAWS 19.23 f/- ACRES
AS SHOWN ON EXHIStr 'B" ATTACHED HERETO, AND BY THIS REFERENCE MADE A PART HEREOF.
DATED THIS 2_4 __ DAY OF . . 2000
y . Y USELTON. L.S. 5347
E 0T
PARCEL B-2
MAP OF THE SITE
7 ' 955O 1! M3 4-4412 3'1 : I
SUNROE-01? L4 0.8-
--�L— N 89' 15'39" W 1658.76'
N'LY LINE 1
S112 N£114
SEC 14-6--11 3 1
NOT A PART a o
"al �
�w
T.P.Q.8. cA
• G� r 1
L 1 501 1 1
*0'
8•
ti O�
�
1' 7 q .:
Ln !
ONE DATA
4y� C �.
TF� 15535
MOB 79-0i4 —50
CURVE DATA
� I
t
1V
0 50' 100' 20o• 400,
NO.� DIRECTION DlSDISTANCE
L 1
S B9"42'S0' J"
B.S. iS•
L2
S 88'4s sz" w
is_0s•
L3
S 6D'S7 59" W
3D.03'
t4
TJ $9'15'39" Y1
50.00'
NUI�rsFR
aEtra
ru�rus
LENGTH
64.44'44"
100.00'
113.00'
C2
iT335i"
1065.00'
326.a8'
C3
1641'10"
94.00'
27.38'
PARCEL B-2
LEGAL DESCRIPTION
Page 1 of 1 Page
THE LAND DESCRIBED HEREIN IS SITUATCO IN THE CITY OF HUAMNCTON BFACH. COUNTY:OF
ORANGE, STATE OF CALIFORNIA, BEING A PORTION OF SEC710N 14. TOWNSHIP 6 SOUTH.
RANGE 11 VIM OF THE RANCHO LAS BOLSAS, AS PER MAP RECORDED IN BOOK 51. PAGE 14
OF MISCELLANEOUS MAPS, RECORDS OF THE COUNTY OF ORANGE. MORE PARTICULARLY
CESCRISED AS FOLLOWS.
A PORTION OF THAT LAND SHOWN AS THE DESIGNATED REMAINDER ON MAP THEREOF OF TRACT
NO. 15535 RECORDED SEPTEMBER 14. 1999 IN BOOK 790. PAGES 44 THROUGH 50.
INCLUSIVE. OF DAPS, RECORDS OF THE COUNTY OF ORANGE MORE PARTICULARLY DESCRIBED
AS FOLLOWS.
BEGINNING THE NORTHEAST CORNER OF THE SOUTH ONE-HALF OF THE NORTHEAST ONE -
QUARTER OF SAID SECTION 14, PER SAID TRACT NO. 15535: THENCE ALONG THE NORTHERLY LINE OF
SAID SOUTH ONE-HALF, 14ORTH 89' 15 39- WEST 50.00 FEET TO THE WESTERLY RIGHT OF WAY OF
B:ACH BOULEVARD AS SHOWN ON SAID TRACT NO. 15535; THENCE ALONG SAID WESTERLY RIGHT OF
WAY SOUTH 00'17'01" WEST 472.08 FEET TO THE TRUr POINT OF BEGINNING. THENCE CON7714UING
ALONG SAID WESTERLY RIGHT OF WAY SOUTH 00' 17'01' VIEST 580.16 FEET TO A POINT 1N THE
GENERAL NORTHERLY RIGHT OF WAY OF PACIFIC WEN -AVENUE. DEDICATED PER SAID TRACT NO.
IHtNc£ ALONC SAID CENERAL NORTHCAY RIGHT OF WAY, THROUGH THE FOLLOWING COURSES.
SOUTH 6O'57.59' WEST 30.03 FEET, THENCE SOUTH 88'4852" WEST 15.08 FEET TO THE BEGINNING
OF A TANGENT CURVE, CONCAVE NORTHERLY, HAVING A RADIUS OF 94.00 FEET; THENCE 4ESTERLY
ALONG SAID CURVE 27.38 FEET THROUGH A CENTRAL ANGLE OF 164110" TO THE BECINIVINC OF A
COMPOUND CURVE, CONCAVE NORTHEASTERLY, HAWNC A RADIUS OF 1065.00 FEET, A LINE RADIAL TO
SAID POINT MRS SOUTH 15730101" WEST; THENCE NORTHWESTERLY ALONG SAID CURVE 326.46 FEET
THROUGH A CENTRAL ANGLE OF 173.3516 TO A P0114T IN THE ARC OF SAID CURVE TO WHICH A
RADIAL LINE BEARS SOUTH 33"0353" ItiEST; THENCE LEAVING SAID GENERAL NORTHERLY RIGHT OF
KAY OF PACIFIC VIEW AVENUE. NORTH 253276" EAST 444.93 FEET TO THE BEGINNING OF A
TANGENT CURVE, CONCAVE SOUTHEASTERLY. HAVING A RADIUS OF 100.00 FEET; THENCE ALONG SAID
CURVE 113.00 FEET IHROUGH A CENTRAL ANGLE OF 644444"; THENCE TANGENT TO SAID CURVE
SOUTH 894150" EAST e5.15 FEET TO THE TRUE FOtNT d-r-fi!i,VNlNG.
CONTAINS 3.42 ACRES MORE OR LESS.
AS SHOWN ON EXHIBIT 'S, ATTACHED HERETO AND 6Y THIS REFERENCE MADE A PART HEREOF.
DATED THIS 3 ! _- . DAY OF -�r .�.a.CC? -. 2000
WO Sli
LAL V 'P`f
MP 12/31/0.3
sllF OF
Lp�IEQ�a\�
RCA ROUTING SHEET
INITIATING DEPARTMENT: Economic Development
SUBJECT: First lmple�nentation Agreement with Mayer Financial LP
COUNCIL MEETING DATE: I May 15, 2000
RCA ATTACHMENTS
STATUS
Ordinance w/exhibits & legislative draft if applicable)
Not ApELcable
Resolution wlexhibits & le islative draft if applicable)
Not Applicable
Tract Map, Location Map andlor other Exhibits
Not Applicable
Contract/Agreement (wlexhibits if applicable)
(Signed in full by the gLtZ Attome
Attached
Subleases, Third Party Agreements, etc.
(Approved as to form by Ci Attome
Not Applicable
Certificates of Insurance (AppmvedpX the Ci ,Attome
Not Applicable
Financial Impact Statement Unbud et, over $5,000
Not Applicable
Bonds If applicable)
Not Applicable
Staff Report If applicable)
Not Applicable
Commission, Board or Committee Report If applicable)
Not Applicable
Findings/Conditions for Approval and/or Denial
Not Applicable
EXPLANATION FOR MISSING ATTACHMENTS
pg�at 4 vz
REVIEWED
RETURNED
FOR ARDED
Administrative Staff
Assistant City Administrator Initial
City Administrator Initial
City Clerk
EXPLANATION FOR RETURN OF ITEM:
/ i ,1
RCA Author. Biggs